The aim of this theoretical paper is to understand the meaning of identity and it is shaping at the workplace. While focusing on teacher leaders’ professional identity, this paper examines the notion of identity, and its development in education settings. The notion of identity formation determines teacher identity formation and teacher leaders’ identity development in various contexts. The paper reviews literature on how teachers evolve their leadership identity as a result of personal characteristics integrated into external and internal factors. This assimilation contributes to the process of identity formation. Personal attributes include credibility as a competent classroom teacher, intrinsic motivation for leadership, ability to create a positive school culture, utilization of the past experiences and having knowledge of the field. Other factors include influence of context or school culture, professional support available at work, appreciation and guidance from senior leadership, leadership models or structures in schools, professional learning communities, campus-based professional development courses or programs, professional networking and collegial practices in the school. The reviewed literature also indicates that teacher leadership identity is an important aspect of teacher professional development, particularly in the UK and the US school settings. The review also brings up the significance of teachers as leaders and highlights how teachers shape their leadership identity while working in school context. As this review identifies lack of research on teacher leaders’ identity formation in TESOL contexts as well as higher education institutions, it concludes with suggestions for future research in the said field.