This study aimed to determine the influence of transformational leadership (TL) and innovation on business performance and evaluate the possible mediating role of innovation on the relationship between TL and business performance in the context of post-pandemic in Mexico. Thus, quantitative research was performed using structural equations based on covariance (CB-SEM) using the maximum likelihood method. A self-administered survey was used to gather data from a random sample of 225 micro, small and medium-sized firms (MSMEs) in Guanajuato, Mexico. The results reveal that TL has a significant influence on innovation and only a significant indirect effect on firm performance was demonstrated. Moreover, innovation demonstrated to play a fully mediating role in the relationship between TL and firm performance. These findings suggest that TL can be an effective strategy to overcome the challenges of the COVID-19 pandemic and improve innovation and performance. Therefore, this study provides valuable information for decision-makers in order to promote the growth and resilience of their firms to face future challenges.