The evolution of governance from ancient times to the present highlights the critical role of ethics in ensuring effective and fair administration. This study explores the necessity of ethical governance in Nepal, emphasizing the interplay between good governance and ethical leadership. The literature review traces the historical development of governance concepts, from the social contract theories of Hobbes and Rousseau to contemporary definitions that stress transparency, accountability, and participation. Ethical governance is identified as essential for addressing current shortcomings in Nepal's governance structures, despite existing legal frameworks. Ethical leadership, characterized by integrity, accountability, and fairness, is pivotal in fostering trust, transparency, and sustainable decision making. Based on the narrative review, this research underscores that while good governance focuses on systems and outcomes, ethical governance ensures these are achieved through morally sound principles. The study concludes that Nepal's path to sustainable development and genuine prosperity lies in embedding ethical governance deeply within its political and administrative frameworks, driven by committed ethical leadership.