Although narcissistic individuals are generally perceived as arrogant and overly dominant, they are particularly skilled at radiating an image of a prototypically effective leader. As a result, they tend to emerge as leaders in group settings. Despite people’s positive perceptions of narcissists as leaders, it was previously unknown if and how leaders’ narcissism is related to the performance of the people they lead. In this study, we used a hidden-profile paradigm to investigate this question and found evidence for discordance between the positive image of narcissists as leaders and the reality of group performance. We hypothesized and found that although narcissistic leaders are perceived as effective because of their displays of authority, a leader’s narcissism actually inhibits information exchange between group members and thereby negatively affects group performance. Our findings thus indicate that perceptions and reality can be at odds and have important practical and theoretical implications.