Background:The purpose of this study is to analyze the relationship between participatory ethical culture and evaluating the performance of knowledge employees and its outputs in knowledge-based companies in Tehran. Method: This study was applicable in terms of purpose and research method was descriptive-correlational. The statistical population was senior managers and deputies of knowledge-based companies in Tehran. By simple random sampling method, 400 people were selected as the sample with a return rate of 388 people. The research tool was a researcher-made questionnaire. To test the research hypotheses, structural equation tests and partial least squares method have been used. Results:The results of this study showed that there is a positive and significant relationship between evaluating the performance of knowledge staff with individual outputs and organizational outputs. Also, the moderating effect of participatory ethical culture on the relationship between performance appraisal of knowledge employees and individual outputs as well as the relationship between performance appraisal of knowledge staff and organizational outputs has been confirmed. Conclusion:When there is a culture of participatory ethics in an organization, performance appraisal, although it increases organizational outcomes, further leads to improved individual outcomes.