Management and health care literature is increasingly preoccupied with leadership as a collective social process, and related leadership concepts such as distributed leadership have therefore recently gained momentum. This paper investigates how formal, i.e. transformational, transactional and empowering, leadership styles affect employees’ perceived agency in distributed leadership, and whether these associations are mediated by employees’ perceived organizational efficacy. Based on large-scale survey data from a study at one of Scandinavia’s largest public hospitals (N = 1,147), our results show that all leadership styles had a significant positive impact on employees’ perceived agency in distributed leadership. Further, organizational efficacy related negatively to employees’ perceived agency in distributed leadership; however, a mediatory impact of this on the formal leadership styles-distributed leadership relationship was not detected. These results emphasize the importance of formal leaders to enhance employee involvement in various leadership functions; still, employees might prefer to participate in leadership functions when they perceive that the organization is struggling to achieve its goals.