Employee involvement is an organizational phenomenon that has received increasing empirical attention. Although much research has examined the outcomes of involvement at the organization level, arguments can be made for exploring involvement at the work-unit level and for investigating the processes by which a unit-level climate of involvement may be created or emerge. Building on largely untested suggestions that such processes are likely to be motivational and initiated by employees' immediate supervisors, this paper incorporates two concepts of managerial perceptions and leadership into a work-unit level model of involvement climate. In particular, this study examines the indirect association of managerial perceptions about subordinates' ability to perform and about the utility of organizational practices for facilitating performance, as well as the direct association of transformational leadership, with a climate of involvement. The association of involvement climate with citizenship, absenteeism, and voluntary turnover is also considered. Using structural equation modeling in a sample of 167 work units, results indicate that leadership fully mediates the relationship between managers' perceptions about their subordinates and climate. Further, climate partially mediates and fully mediates the relationship between leadership and citizenship, and absenteeism, respectively. Implications for future research are discussed. Copyright © 2005 John Wiley & Sons, Ltd.