This study extends both Social Exchange Theory and the Job-Demands Resources model by examining the link between psychological contract breach (PCB) and work engagement, and by integrating job satisfaction into this exchange relationship. We argue that PCB reflects employees' feelings of resource loss, and that these feelings impact work engagement through their impact on job satisfaction. Levels of employee work engagement can therefore be viewed as reciprocation for the exchange content provided by employers. We conduct structural equation modeling on longitudinal survey data from 191 employees, and our results suggest that the negative effect of psychological contract breach on work engagement is mediated by job satisfaction. Employee engagement is a growing academic research area with particular resonance for practitioners and governments (e.g. MacLeod and Clarke 2009; Rayton, Dodge and D'Analeze 2012). However, engagement has relatively recently become the subject of study as a distinct construct in the academic literature, and the antecedents and consequences of engagement are not yet sufficiently developed either theoretically or empirically (Robinson, Perryman and Hayday 2004; Torraco 2005; Smith 2006; Macey and Schneider 2008). Understanding the antecedents and consequences of employee engagement is important for organizations because a disengaged workforce is costly (e.g. Fleming, Coffman, and Harter 2005; MacLeod and Clarke 2009; Rayton et al. 2012). The combination of the popularity and importance of engagement with the current lack of academic understanding creates a need for clarification of the factors that drive employee engagement (Robinson et al. 2004; Saks 2006; Bakker and Schaufeli 2008; Macey and Schneider 2008).Our study contributes to the on-going debate about the drivers of employee engagement in organizations through examination of an exchange relationship in the specialist lending division of a UK bank. We make two specific contributions. First, this is the first study to examine the impact of feelings of resource loss, i.e. psychological contract breach (PCB), on work engagement. Second, we propose and test the hypothesis that job satisfaction mediates the relationship between PCB and work engagement. By analyzing the links between PCB, job satisfaction and work engagement, our study extends both Social Exchange Theory (SET) and the Job Demands-Resources (JD-R) model. PCB is one of the central concepts of SET (Conway and Briner 2005). Zhao, Wayne, Glibkowski, and Bravo (2007, p.649) defines breach as "the cognitive evaluation that one's