Leaders may use humor to pursue various relational goals within hierarchical relationships. Humor can create cohesion and strengthen solidarity with followers, but it can also create divisions among them and increase the leader’s status. Humor’s general duality becomes especially apparent in leader-follower relationships. This chapter describes how perceptions of leader humor and effectiveness go hand in hand, partly due to implicit personality theories. We show that the effects of leader humor are more potent in some tasks and for some persons than others and that the impact of general leader behaviors such as transactional and transformational leadership partly depend on leader humor use. We explain various response strategies that enable listeners to acknowledge humor and power differences. Finally, we highlight differences in the use of humor between female and male leaders. The chapter concludes with future research ideas and implications for leaders in the workplace.