The purposes of this study were to examine the existence and nature of ethical conflicts faced by nurses in public sector hospitals and to investigate the impact of such conflicts on their performance in addition to looking at the mediating role of proactive behavior. The study sample comprised 300 female nurses from three public sectors hospitals in Pakistan. Data was collected through close-ended questionnaires and informal interviews. Inferential statistics were used to make sense of the relationship among different variables and test the given hypotheses. Results were found to be in-line with previous studies. This study confirmed that proactive behavior of employees mediates the relationship between ethical conflict and job performance. Moreover, it was found that value-congruent environment of the organization can increase the chance of proactive behavior which in turn leads to increase in nurses’ performance. Healthcare organizations are most likely to experience reduced operating capacity and increased attrition costs when nurses are non-performing. This study has identified the types of ethical conflicts prevailing in public healthcare organization. Managers/administrators can focus them one by one to reduce ethical conflicts and improve the overall service delivery of hospitals.