Capital structure decisions have been one of the most important issues of the corporate finance literature. Theoretically, it is also expected that liquidity has an important effect on companies' capital structure. In this research, the casual relationship between financial leverage and liquidity was investigated using panel data in listed firms of Tehran Stock Exchange during 2006-2010. To do so, 108 listed firms of Tehran Stock Exchange were selected as the sample of the study and bid ask spread has been used as a criterion for liquidity measurement. In addition, F and Hausman tests were applied to select the best model of the panel, fixed effects and stochastic data. The findings showed a significant relationship between financial leverage and liquidity in Tehran Stock Exchange. In other words, financial leverage has a reverse effect on liquidity and on the other hand, liquidity has a positive and direct effect on financial leverage. تفاصيل المقالة