This study constructs a moderating mediation model to link public sector employees’ Artificial Intelligence (AI) usage with employees’ moral norms and ethical decision-making behaviors. Based on the theory of public service motivation, this study hypothesizes that the impact of AI usage on employees’ ethical decision-making behaviors acts through the mediating effects of employees’ service motivation, employees’ moral norms, and employees’ ethical perceptions and that the relationship between AI usage and employees’ service motivation, employees’ ethical norms, and employees’ ethical perceptions is moderated by the culture of the public organization. The selected data from 417 public sector employees in China supported most of the research hypotheses. The findings show that employee service motivation, employee moral norms, and employee moral cognition mediate the relationship between AI usage and employee ethical decision-making behavior. Public organization culture moderated the relationship between AI usage and employee service motivation, as well as AI usage and employee ethics. This study reveals the complex mediating and moderating relationships between AI usage and employees’ ethical decision-making behaviors in the public sector. It provides important theoretical and practical insights for further understanding and promoting public sector employees’ ethical behaviors in the era of AI.