Background: The escalating complexity of healthcare environments underscores the importance of nurse managers’ ethical competency, which impacts organizational culture, work climate, and healthcare outcomes. Objective: The purposes of this study were to identify and describe the characteristics of nurse managers’ competency in ethical principles in healthcare settings. Methods: A systematic search was conducted across the Web of Science, Scopus, and PubMed databases, covering the literature from January 1, 2014, to April 1, 2024. Articles were selected based on specific inclusion criteria, and data were extracted and analyzed using a frequency analysis of the identified characteristics. This systematic review adhered to the PRISMA guidelines and the Joanna Briggs Institute assessment tools. The review protocol was registered in PROSPERO (ID: CRD42024542594). Results: The review analyzed 22 studies, each focusing on nurse managers and their ethical competencies. Fourteen distinct characteristics of ethical competency were identified, with ethical leadership, ethical decision‐making, and conflict resolution being the most prominent. Key ethical problems included conflicts between personal values and organizational policies, pressures to compromise ethical standards, and management of limited resources. These problems often led to significant consequences such as decreased staff morale, increased stress and burnout, and compromised patient care quality. Conclusions: The development of ethical leadership and the ability to make ethical decisions are fundamental for nurse managers to create supportive work environments and reduce burnout. Promoting continuous professional development and fostering an ethical culture is essential for maintaining high ethical standards. Future research should explore how cultural, organizational, and environmental differences influence ethical decision making and leadership. Implications for the Nursing Management: The development of ethical leadership and the ability to make ethical decisions are fundamental characteristics of ethical principles competency, as they facilitate the achievement of an adequate work environment and reduce burnout and emotional overload.