PURPOSE This study was done to identify the relationship between transformational leadership by head nurses and positive psychological capital, psychological well-being, stress and somatization of staff nurses. METHOD Participants in this study were 300 staff nurses in general hospitals located in G and B cities. Data were collected using self-administered questionnaires and analyzed using SPSS Win 18.0 program. RESULT The major findings were as follows; 1) There were positive influences of transformational leadership on positive psychological capital, psychological well-being, and a negative effect on stress. 2) Positive psychological capital had a positive influence on psychological well-being, and negative effects on stress and somatization. 3) In the analysis of the mediating role of the positive psychological capital, transformational leadership was shown to indirectly affect psychological well-being and stress through positive psychological capital. CONCLUSIONS These findings suggest that transformational leadership has important influences on employees' psychological well-being and stress via employees' positive psychological capital. To enhance psychological well-being and reduce stress for nurses, it is important to develop not only the leadership of head nurses but also the positive psychological capital of staff nurses.