Although leadership literature has included its link to emotions (see Lemmergaard and Muhr 2011 for a discussion), there has not been much discussion–and research for that matter–on the interrelationship between leadership, emotions and innovation (Lockyer and McCabe 2011). Opposed to formalized processes and routine tasks, innovation is an uncertain and highly ambiguous endeavour (Kline and Rosenberg 1986; Poole and Van de Ven 2000). Intuitively, then, participation in innovative processes should involve a variety of emotions, such as fear, anxiety, hope, frustration, anger and exhilaration. The interrelationship between leadership, emotion and innovation is therefore worth further investigation, and will be the topic of this chapter. As will be demonstrated in the following, because of its assumed ability to achieve change, transformational leadership is often argued to be the ideal leadership approach to facilitate innovation (Sosik et al. 1998; Van de Ven 1986). Transformational leadership, however, has received a lot of criticism for its lack of moral foundation. As a response to this criticism the concept of authentic leadership was developed (Bass and Steidlmeier 1999). Authentic leadership, which is based on ideas from positive organization scholarship (POS), assumes that positive emotions are preferred since negative emotions are generally considered to be dysfunctional (Cameron and Caza 2004). This unilateral theoretical development raises interest in the interrelationship between leadership, emotions and innovation and we will therefore discuss the preference for positive emotions from a critical perspective. We will question whether only positive emotions such as excitement, relatedness and optimism lead