In the complex practices of development, ethical decisions are continually demanded of practitioners. This paper addresses the process of teaching ethics, within a framework of applied ethics and with an emphasis on the development of an understanding of ethics-in-practice in current and future practitioners. Building on recent work in the area of ethics in development and humanitarian practice, it addresses approaches to teaching professional ethics in community development and other fields, and debates about the value of teaching ethics. In particular, this article discusses how students develop what we call ‘ethical capability’—the cognitive and emotional resources needed to negotiate the contradictions and dilemmas of everyday practice, and to apply ethical decision-making models. Analysing a current post-graduate applied development ethics course and experience of similar courses in undergraduate business, we investigate how these can prepare students for the messy reality of community development practice. With very few courses teaching ethics in development, we propose that it is important to enhance ethical capability in community development students and practitioners, and that doing so supports their work and wellbeing.