Physical education creates opportunities to enhance development in the physical, cognitive, and affective domains. Physical Education, which can enable a learning context involving affective and social moral interactions, also provides opportunity to create situations that will enhance moral development of students. This paper suggested that physical education provides a context for intergrading and practicing moral cognition and moral behavior which is more conducive than the contexts provided by other subjects. Moral advance requires not only an appropriate learning context, but also well-planned teaching programs, appropriate teaching strategies, and the role model of educators to accomplish it. Several instructional strategies and assessment tools for enhancing students' moral development in physical education setting are presented.