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Background No instruments, to our knowledge, exist to assess leadership competency in existing and emerging allied health professional (AHP) leaders. This paper describes the development and preliminary exploration of the psychometric properties of a leadership competency instrument for existing and emerging AHP leaders and examines (i) its factor structure, (ii) its convergent validity with the Leadership Practices Inventory (LPI), and (iii) its discriminative validity in AHPs with different grades. Methods During development, we included 25 items in the AHEAD (Aspiring leaders in Healthcare-Empowering individuals, Achieving excellence, Developing talents) instrument. A cross-sectional study was then conducted in 106 high-potential AHPs from Singapore General Hospital (34 men and 72 women) of different professional grades (49 principal-grade AHPs, 41 senior-grade AHPs, and 16 junior-grade AHPs) who completed both AHEAD and LPI instruments. Exploratory factor analysis was used to test the theoretical structure of AHEAD. Spearman correlation analysis was performed to evaluate the convergent validity of AHEAD with LPI. Using proportional odds regression models, we evaluated the association of grades of AHPs with AHEAD and LPI. To assess discriminative validity, the c-statistics – a measure of discrimination – were derived from these ordinal models. Results As theorized, factor analysis suggested a two-factor solution, where “skills” and “values” formed separate factors. Internal consistency of AHEAD was excellent (α-values > 0.88). Total and component AHEAD and LPI scores correlated moderately (Spearman ρ-values, 0.37 to 0.58). The c-index for discriminating between AHP grades was higher for AHEAD than for the LPI (0.76 vs. 0.65). Conclusion The factorial structure of AHEAD was generally supported in our study. AHEAD showed convergent validity with the LPI and outperformed the LPI in terms of discriminative validity. These results provide initial evidence for the use of AHEAD to assess leadership competency in AHPs. Electronic supplementary material The online version of this article (doi:10.1186/s12913-016-1301-1) contains supplementary material, which is available to authorized users.