Drawing upon psychological contract theory, this study investigated how and when perceived overqualification may affect employees’ creativity. Data were collected from 164 employees and their immediate supervisors in Chinese manufacturing, information technology (IT), and services companies (female = 53.05%; age range 31–50 years; bachelor’s degree = 70.73%) using a two-wave approach over one month. Results from hierarchical regression analysis and bootstrapping analysis indicated that self-perception of overqualification was associated with lower employee creativity via less job crafting. Furthermore, higher leader–member exchange accentuated the indirect effect of perceived overqualification on creativity via job crafting. These findings are consistent with psychological contract theory in that overqualified employees are aware of organisations’ failure to live up to the psychological contract. These findings imply a need for addressing organisational context factors to provide guidance for supporting employee job crafting across qualification levels.