Virtual teams are an important work structure in software development projects. However, little is known about what constitutes effective virtual team leadership, in particular, what amount of leader delegation is appropriate in a virtual environment? This study investigates virtual team leader delegation and explores the impact of delegation strategies on virtual team performance mediated by team motivation, team flexibility and team satisfaction with the team leader The research is a report of a pilot study run on student teams carried out to refine and test the research constructs and research model. The study found that virtual team leaders delegate more to competent virtual teams and that delegation is positively correlated with team member satisfaction with their leader and with team member motivation. This work provides important knowledge for software-based organizations interested in developing virtual team leadership skills.