Purpose: In Italy, only recently education policy makers have introduced a requirement for schools to implement the processes of self-evaluation, strategic planning and results’ reporting. In this article, we aim to explore how the new leadership approach of school principals in the context of the introduction of the new accountability system is affecting the practices of teachers. Research Method: Using quantitative data from an empirical study focused on the primary and secondary schools involved in a ministerial pilot project “School Evaluation and Development,” (VALES), we employ multilevel structural equation modelling to test the relationships among principal leadership, school capacity building (represented by the variables such as teacher self-efficacy, instructional leadership of teachers, collaborative culture and supportive learning climate) and change in teachers’ professional practices as well as teaching methods. Findings: A positive indirect relationship between principal leadership and change in teachers’ practices and methods is shown. The indirect effects are mainly a result of increased teachers’ instructional leadership. Implications: The research suggests that principals have a central role in building organizational capacity for school improvement by using self-evaluation and improvement processes. Moreover, the sharing of leadership with teachers appears to be crucial in promoting change in teaching and teacher commitment to improving professional practices. Results of this study draw attention to the following aspects: the importance of promoting principals’ leadership for learning development, adoption of a balanced approach to principals’ performance evaluation, and fostering the distribution of leadership in schools.