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In Word 2000-2003, use the Format>Paragraph command and use the Line spacing drop-down. "Exact" spacing will let you set leading in points, but beware inserting a picture in-line with your text, only a bottom sliver will display. If you use picture in-line, choose "Multiple" and set the number to something like 1.25.

In Word 2007-2010, find the Paragraph group on the Home tab of the Ribbon. Click on the Line Spacing button and either choose one of the pre-set options or select Line Spacing Options to create custom leading.

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