Leadership effectiveness is contingent on the ability to affect followers' emotions. This paper explores a model suggesting that the quality of the relationships between leaders and their followers (LMX) relates negatively to a display of negative emotions by employees during their interactions with customers, and subsequently relates to employees' performance and customers' emotions. The model was tested on a sample of 95 service employees and on 485 interactions between these employees and their customers. The findings show that LMX was negatively related to the display of hostility by employees towards their customers. Employee hostility was negatively related to employees' ability to provide a solution to customers' problems, which was further related to customers' hostility towards employees. We discuss the implications of these findings for both theory and practice.