The rise of distributed work arrangements has led to a shift in the way leadership is practiced and a greater emphasis on the ability of leaders to manage, motivate, and support their employees through digital and virtual means. The aim of this study is to explore the role of leadership capability in distributed (remote and hybrid) workforces on employee well-being and job satisfaction and assess the effectiveness of leadership among various levels of virtual leadership capability. A quantitative, cross-sectional research design was adopted and data were gathered from employees working in distributed teams using standardized and validated scales measuring leadership capability, employee well-being, and job satisfaction. Leadership capability was evaluated by such dimensions as communication clarity, building trust, digital support, supporting autonomy, and psychological well-being, stress, and work-life balance were aspects of employee well-being. Data were analyzed by using descriptive statistics, correlation analysis, multiple regression and mediation analysis. The results show that leadership capability has a significant positive influence on the well-being of employees as well as job satisfaction (p < 0.05). Furthermore, employee well-being was found to mediate the effect between leadership capability and job satisfaction partially, which suggested that effective leadership contributes to job satisfaction directly and indirectly by improving well-being of employees. The findings emphasize the importance of leadership capability as a key organizational resource in distributed work settings, as well as the importance of developing leadership competencies specific to virtual settings in order to foster employee well-being and satisfaction.