Leading an early childhood and preschool education institution is a complex process that requires skilled, competent, and active involvement of the principal, as well as collaboration with all employees of the institution. The principals' competencies are of crucial importance for achieving the fundamental goals and tasks of early childhood education, improving all aspects of the educational process, supporting and strengthening the professional growth and development of educators, and improving the quality of early childhood education institutions. The theoretical part of the thesis addresses key issues related to early childhood education, competencies of principals' and educators, and the professional development of educators, as well as providing a fundamental understanding of key aspects of early childhood education, the roles of principals' and educators, and the importance of professional development within the educational system. In the empirical part of the thesis the aim is to examine the relationship between the competences of principals' of early and preschool education institutions, measured through self-assessment and assessments by educators, and their relationship with professional development and job satisfaction of educators was investigated. The results of the research conducted on a sample of 246 respondents, 46 principals and 203 educators of early and preschool education institutions in five eastern counties of Croatia: Vukovar-Srijemska, Osijek-Baranjska, Brod-Posavska, Požega-Slavonska and Virovitica-Podravska, show that principals’ consider themselves competent in relation to specific competencies, while educators also assess them as such. There is no statistically significant difference between the principals' assessment by educators and self-assessment of competencies. The connection between the principals' competence assessment and the professional development of educators was partially established, but a statistically significant connection between the principals' competencies and the educator's job satisfaction was confirmed. The thesis provides an insight into the dynamics of early and preschool education institutions in the eastern parts of the Republic of Croatia. The scientific contribution is reflected in the identification of the relationship between the principals' competencies and the professional development and work satisfaction of educators, with an emphasis on emphasizing the importance of supporting the professional development of educators in early and preschool education institutions.