Teacher collaboration and collective teacher efficacy are key factors in a school's capacity for improvement. Based on assumptions drawn from social capital theory, we posit that principals play a pivotal role in shaping teachers’ work environments, thereby enhancing collaboration and collective efficacy. However, evidence on the determinants of these factors and their dynamics as aspects of a school's social capital remains limited. Using longitudinal survey data from teachers in Germany collected over three measurement occasions (n₁ = 619, n₂ = 674, n₃ = 263), this study provides evidence of a temporal relationship between principal leadership to promote within-school collaboration and collective teacher efficacy, mediated by teacher collaboration. Additionally, we find a reciprocal temporal relationship between teacher collaboration and collective efficacy. Our findings contribute to understanding the causal relationship between these factors and underscore the critical role of principal leadership in fostering this interplay.