This study, based on three years of teacher response data from the bi-annual North Carolina Teacher Working Condition Survey, provides evidence that principals have an impact on teachers’ perceptions of their school environment, which are known to be associated with teacher mobility decisions (Béteille, Kalogrides and Loeb, 2012; Hamilton, Loeb and Wyckoff, 2002; Hanushek, Kain and Rivkin, 2004). The findings suggest that teachers’ ratings of their school environment do depend on which principal is leading their school independent of other school contextual factors; the principal matters. This conclusion is reached by estimating models which use both principal and school fixed effects to predict average teacher ratings on four measures of the school’s environment: teachers’ ability to focus on teaching, facilities are well maintained and are sufficient to school needs, teacher empowerment/school leadership, and teacher professional development. The findings are important for policy makers because they indicate that principals are important in the determination of how teachers feel about their work environment, which has been linked to teacher retention, and that policies that target general principal skill improvement may be more useful than targeted training on one of the measured dimensions of the school environment. It also suggests that developing a way to assess a potential principal candidate’s skill set in staff management skills related to these areas of the working environment might be a good investment for a district that is having trouble keeping high quality teachers.