Aim: To empirically investigate the impact of ethical leadership on nurses' moral courage in China and examine the mediating role of psychological empowerment in this relationship. Background: Moral courage is essential for alleviating nurses' moral distress, safeguarding patients' safety and rights, and providing high‐quality care. Previous studies have emphasized the strong relationship between ethical leadership and moral courage; however, little is known about the actual impact of ethical leadership on nurses' moral courage. This study introduces psychological empowerment, sets out to test empirically its role in the relationship between ethical leadership and moral courage, and provides countermeasures and a theoretical basis for cultivating nurses' moral courage. Methods: Between February and May 2023, a questionnaire survey was conducted among 837 nurses from five hospitals in Sichuan Province, southwest China. The three validated self‐report scales, the ethical leadership scale, psychological empowerment scale, and nurses' moral courage scale, were used to collect data. We used IBM SPSS 27.0 for descriptive statistics, univariate analyses, Cronbach's α, and correlations of each variable, modeling a hypothesized model of ethical leadership on moral courage in nurses and testing the internal mechanisms by AMOS 26.0. Results: Ethical leadership significantly positively correlated with psychological empowerment (r = 0.374, p < 0.01), as well as moral courage (r = 0.341, p < 0.01). In addition, psychological empowerment significantly positively correlated with moral courage (r = 0.518, p < 0.01). The structural equation modeling (SEM) shows a satisfactory model fit: χ2 = 2156.36, df = 849, χ2/df = 2.540, root mean square of approximation = 0.043, standard root mean square residual = 0.047, normed fit index = 0.911, Tucker–Lewis index = 0.941, and comparative fit index = 0.944. Ethical leadership directly influenced moral courage (β = 0.135, p = 0.006) and indirectly affected moral courage via psychological empowerment (β = 0.247, p = 0.001). Conclusion: Promoting ethical leadership and psychological empowerment is essential for nurses to promote moral courage. The results of this study illustrate the pivotal role of psychological empowerment in establishing the impact of ethical leadership on nurses' moral courage and the partially mediating part of psychological empowerment in this relationship. Implications for Nursing Management: Nursing managers should understand the importance of moral courage in protecting patients' rights and interests, as well as in maintaining a stable nursing workforce. They should reinforce the positive influence of ethical leadership and embrace an ethical leadership style. In addition, providing relevant training to enhance nurses' psychological empowerment will help cultivate moral courage among them. [ABSTRACT FROM AUTHOR]