Primary healthcare institutions are essential to accessible, continuous, and people-centred healthcare delivery, yet their performance is strongly influenced by leadership capacity, workforce conditions, communication, and resource availability. In Sri Lanka, divisional hospitals provide important services to local communities, particularly outside major urban centres, but evidence concerning transformational leadership within these settings remains limited. This study examined transformational leadership practices in selected Sri Lankan divisional hospitals and explored their perceived influence on staff motivation, teamwork, communication, patient trust, and institutional performance. A mixed-methods design was employed in three divisional hospitals representing different institutional categories: Anamaduwa Divisional Hospital (Type A), Lunuwila Divisional Hospital (Type B), and Galmuruwa Divisional Hospital (Type C). Participants comprised 32 primary care doctors, 15 nursing officers, and 21 patients, giving a total sample of 68. Quantitative data were collected through interviewer-administered questionnaires, while qualitative data were generated through five focus group discussions involving doctors, nursing officers, and patients. Instruments were developed around the transformational leadership dimensions of idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration. Quantitative data were analysed using descriptive statistics, and qualitative data were examined through thematic analysis. Findings demonstrated generally favourable perceptions of transformational leadership. The overall transformational leadership score was 4.02 (SD = 0.61) on a five-point Likert scale, with inspirational motivation receiving the highest mean score (M = 4.18) and organizational resource management the lowest (M = 3.41). Among respondents, 81.2% reported that supportive and motivational leadership improved workplace commitment and professional satisfaction, while 76.5% indicated that participatory decision-making strengthened teamwork and interprofessional collaboration. Approximately 73.4% of patients reported increased trust in healthcare services associated with staff responsiveness, respectful communication, and collaborative practices. Nevertheless, resource limitations, staffing shortages, excessive workload, and communication gaps remained important barriers to leadership effectiveness and service delivery. The study concludes that transformational leadership can contribute to stronger staff engagement, teamwork, communication, and patient trust in primary healthcare settings, but its effectiveness is closely connected to institutional support. Leadership development should therefore be accompanied by workforce strengthening, improved communication mechanisms, adequate resource allocation, and supportive organizational systems to promote sustainable, patient-centred healthcare delivery in Sri Lankan divisional hospitals.