This paper examines the relationship between employee discretion and turnover intentions. We test the proposition that this relationship is mediated by employee stress and moderated by employee perceptions of staffing adequacy. We maintain that in assessing the potential effects of increased employee discretion, scholars must also examine the mechanisms through which these benefits are delivered, and the context in which it is provided. In an effort to study discretion in context, we develop and test a “moderated mediation” model in the healthcare setting. Our findings support the hypotheses that employee stress mediates the relationship between discretion and turnover intentions. In addition, employee perceptions of staffing adequacy are shown to moderate the relationship between employee discretion and stress.