Transformational leadership is a concept and a belief in the contemporary business world which has proven results in employee development and organizational success. Leaders with transformational leadership behaviors coach and inspire their followers to achieve the targets by changing the value systems, culture and mindsets and sometimes being the role models to them. This paper aims to fill the existing research gap by examining the impact of transformational leadership on employee performance in the context of porcelain manufacturing companies in Sri Lanka, specifying the production worker level. Further this study investigates the mediating role of employee engagement between transformational leadership and employee performance. Thus, the current study contributes to the literature in the field of transformational leadership, employee performance and employee engagement. The study was conducted on a sample of 250 production workers in selected porcelain manufacturing companies in Sri Lanka. The data was analyzed using the analytical software SPSS version 23 and descriptive, correlation and regression analysis were conducted. The findings revealed that transformational leadership has a positive impact on employee performance and employee engagement and also employee engagement has a positive impact on employee performance. Importantly, employee engagement mediates the relationship between transformational leadership and employee performance. According to the findings of the study, it is concluded that transformational leadership behaviors impact employee performance and employee engagement. This study adds to the current body of literature by providing insight into the impact of transformational leadership and employee engagement on employee performance in the porcelain manufacturing companies in Sri Lanka, and on the empirical ground, some of the findings and judgements of this study may be important to other organizations to make their employees engaged, develop and increase employee performance towards the organizations.