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Background: nurse managers play a very important role in creating healthy environment for nurse's work. Nurse Managers may face a lot of challenges in this role, so their psychological capital should be considered. Purpose: To assess the relation between nurse managers' Psychological Capital (Psy Cap) and their ability to create a healthy work environment as perceived by nurses. Methods: A descriptive correlational research design was used. Sampling: A convenient sample of 70 nurse managers and 130 nurses were selected from Menoufia University Hospital at Shebin El-Kom. Instruments: Two data collection instruments were used. Instrument one: Psychological Capital Questionnaire (PCQ). Instrument two: Practice environment Scale. Results: more half of nurse Managers (60%) had moderate level of psychological capital and (63%) of nurses perceived moderate favorable practice environment. Conclusion: There was a positive relation between nurse managers' psychological capital and nurses practice environment. Recommendations: This study can be applied in other setting on a larger number of nurse managers to assure the generalizability of results