Moral disengagement is an important construct in moral psychology. It is more than just an influential predictor of various unethical behaviors; it is also an outcome of various psychological variables. Since moral disengagement exerts adverse influence on adolescents’ moral development, a thorough understanding of it followed by the proper counter measures becomes extremely important. Hence, it is necessary to explore factors that influence moral disengagement and the mechanism whereby such factors affect moral disengagement. According to social cognitive theory, family functioning may be associated with adolescents’ moral disengagement. However, scant attention has been given to the underlying mechanisms and processes through which this relationship occurs. Based on previous studies, we hypothesize that conscientiousness serves as a mediator of the relationship between family functioning and moral disengagement. Additionally, the relationship between them maybe not linear, which means there are moderating variables affect them. There is few research, if any, examining whether the mediating effect depends on other factors, for example, moral identity. The present study was to constitute a moderated mediation model in which conscientiousness mediated the link between family functioning and moral disengagement, and moral identity moderated this mediating process. A sample of 1013 adolescents of 5 schools (463 boys and 550 girls, Mage = 13.87 ± .72) was recruited in the study to complete the Chinese family assessment instrument, five-factor personality questionnaire for adolescents, moral identity scale, and moral disengagement scale. We also adopted Andrew Hayes’ PROCESS macro for SPSS to examine the moderated mediation model (Hayes, 2013). The results demonstrated that: (1) after controlling for gender and age, family functioning negatively predicted adolescents’ moral disengagement; (2) conscientiousness played a partial mediating effect between family functioning and moral disengagement. Family functioning not only exert a direct influence on moral disengagement, but also restrained moral disengagement indirectly by increasing conscientiousness; (3) moral identity moderated the mediated path through conscientiousness, such that this indirect effect was much stronger for adolescents with low moral identity relative to those with high moral identity. Consistent with the antagonistic interactions of the protective-protective model, high moral identity could actually protect adolescents with poor conscientiousness from high moral disengagement. This moderated mediation model significantly revealed the psychological mechanism of family functioning on adolescents’ moral disengagement. The current study extends existing literature by exploring factors that influence adolescents’ moral disengagement. The mediating role of conscientiousness helps explain why family functioning decreases moral disengagement, and the moderating role of moral identity helps illuminate the boundary condition of when family functioning are more or less likely to affect moral disengagement. In terms of practical implications, we should attach importance to the effect of family functioning on moral disengagement. Building a good family functioning is important to improve adolescents’ conscientiousness and discourage their moral disengagement. Further, our findings also suggest that parents should place high value on improving adolescents’ moral identity. Even when adolescents hold low conscientiousness, high levels of moral identity can act as a protector factor that mitigates somewhat the adverse effects of poor conscientiousness on moral disengagement.