Objective: Bullying research has recently focused on how moral cognitions and emotions shape the bullying context, though research has less assessed whether and how morality influences the bystander behaviors of youth. The present study assessed whether the level of moral distress students feel when they do not intervene to help bullied peers mediates the relationship between individual moral disengagement and bystander intervention, and whether these associations are moderated by students perception of collective moral disengagement in their classrooms. Method: A sample of 757 adolescents (59.7% girls: M-age = 14.31, SD = 1.24) from 11 Italian secondary schools completed the study measures. Results: Moderated path analysis confirmed that individual moral disengagement-via moral distress-had a negative indirect effect on defending and a positive indirect effect on passive bystanding, both of which became stronger as levels of perceived collective moral disengagement increased. Conclusions: The findings highlight moral distress as an important moral construct that should be considered in research on bystander behavior in bullying. Moreover, the study confirmed the role of the perceived moral context, which should be addressed when designing intervention programs.