Although there have been studies in the past that have highlighted the important role of leader traits in motivating employee innovation behavior, leader perfectionism has been scarcely investigated in this context. This study attempts to explore whether leader perfectionism directed toward employees can facilitate or hinder employee innovation behavior. Based on the transactional model of stress, we propose and test a moderated mediation model using data from a multi-wave, multi-source survey of 334 leader-employee questionnaires. The results show that, for employees with high self-efficacy, leader perfectionism has a positive effect on their challenge stress, which in turn promotes employee innovation behavior; Meanwhile, for employees with low self-efficacy, leader perfectionism has a positive effect on their hindrance stress, thereby discouraging employee innovation behavior. This study has significant theoretical and practical implications as it highlights the underlying relationship between leader perfectionism and employee innovation behavior.