This study aimed to explore the association between prestige norms of moral disengagement and ethnic bullying among Italian early adolescents. Prestige norms of moral disengagement were also examined as possible moderator of the association between individual prejudice and ethnic bullying. Participants were 742 sixth to eighth graders attending multiethnic schools in Italy (49.7% girls), all of Italian heritage, who answered peer and self-report measures. In multilevel models, individual levels of moral disengagement were associated with ethnic bullying, and prestige norms of moral disengagement (classroom level) moderated (cross-level interaction) the association between xenophobic prejudice and ethnic bullying was significant only for high levels of prestige norms. Results highlight the importance of individual prejudices in ethnic bullying and suggest that the processes of socialization of cognitive distortions within peer groups are complex, providing useful insights for interventions.