The ethical environment within organizations significantly shapes employee behavior, workplace relationships, and overall psychological well-being. Organizational ethical climate refers to the shared perceptions among employees regarding appropriate ethical behavior and the procedures for addressing ethical issues in the workplace (Victor & Cullen, 1988). A positive ethical climate establishes norms that encourage respect, fairness, and accountability, while discouraging misconduct such as harassment and abuse of power. In contrast, weak or ambiguous ethical climates often enable unethical behaviors, including workplace harassment, which can have serious implications for employee psychological health and organizational effectiveness. Workplace harassment encompassing verbal, psychological, and social forms of mistreatment remains a critical organizational concern globally. Research indicates that employees exposed to harassment frequently experience elevated stress levels, anxiety, depression, emotional exhaustion, and reduced job satisfaction. These psychological consequences not only affect individual well-being but also undermine productivity, commitment, and organizational performance. This study investigates the relationship between organizational ethical climate and workplace harassment and examines how these factors collectively influence employee psychological health. Drawing on ethical climate theory and occupational stress frameworks, the research explores how organizational norms, leadership behavior, and institutional policies shape employees’ experiences of harassment and their psychological responses. A mixed-methods research design was employed, combining quantitative survey data from 350 employees across multiple sectors with qualitative interviews to capture nuanced insights into workplace experiences. The quantitative component measured perceptions of ethical climate, exposure to workplace harassment, and indicators of psychological health using validated scales derived from established research. Qualitative interviews further explored employees’ perceptions of organizational ethics, reporting mechanisms, and leadership accountability. Findings reveal that organizations characterized by strong ethical climates particularly those emphasizing caring, fairness, and adherence to ethical rules tend to report significantly lower levels of workplace harassment. Statistical analysis demonstrates a strong negative correlation between ethical climate and harassment, suggesting that supportive and principled organizational environments act as protective mechanisms against abusive workplace behaviors. Furthermore, workplace harassment is found to have a significant negative impact on employees’ psychological health, contributing to heightened stress, emotional exhaustion, and reduced well-being. Importantly, the study also identifies ethical climate as a moderating factor that can buffer the adverse psychological effects of harassment, indicating that employees working in ethically supportive environments are better able to cope with workplace stressors. The findings highlight the critical role of ethical leadership, transparent reporting systems, and organizational accountability in promoting a safe and psychologically healthy workplace. By strengthening ethical climates, organizations can reduce the prevalence of harassment and enhance employee psychological well-being. This study contributes to the growing body of literature linking ethical organizational environments with employee mental health outcomes and underscores the importance of integrating ethical governance with workplace health policies. Ultimately, fostering a strong ethical climate is not only a moral imperative but also a strategic organizational practice that supports sustainable employee well-being and productivity.