The author aimed to show that (a) transformational leadership is related to project teams' performance via work engagement and (b) leader distance moderates the relationship between transformational leadership and work engagement. The proposed moderated mediation model was tested using 180 students in an undergraduate management course and working in project teams. The findings supported only the relationship between work engagement and performance, and thus transformational leadership does not appear to be useful in undergraduate project teams. However, the nonsignificant moderator effect revealed an unexpected finding for a direct and marginally significant relationship between leader distance and work engagement.