Leadership has mostly been considered as a unidirectional process centered on leaders influencing their followers. However, recent theoretical developments indicate that followers may also have an impact on their formal leader. In this pre-registered study, we investigate the interplay between shared leadership and formal team leadership (i.e., empowering leadership). We predict that leaders interpret their team’s shared leadership as an investment to reach for common goals. Accordingly, their team’s effort should improve leader trust in the team, which in turn should increase empowering leadership behavior of the leader. Further, we propose that this indirect relation is first-stage moderated by leader self-efficacy. We invited 721 team members and their leaders nested in 169 teams to join a three-wave longitudinal study. Results from Bayesian cross-lagged panel modeling support our predicted mediation effect while also pointing to a reverse effect of empowering leadership on shared leadership. The moderation effect was not supported. This study provides insights into the dynamic and reciprocal interplay between shared and formal leadership. Our findings underline that formal leaders do not perceive shared leadership as a threat but instead value the team effort reflected in higher trust and decision latitude.