Recent corporate scandals have led some scholars to argue that business schools are failing in their goal to create students who will behave with integrity and emerge as ethical leaders in the workplace. In this instructional note, we focus on our experiences teaching business ethics to Gen Y students, and the challenges associated with teaching ethics in this context. Overall, we suggest that there is limited evidence that we are preparing our students to manage ethical dilemmas effectively in 21st century organizations. We argue that educators must find ways to enhance students' motivation, opportunity, and ability to internalize their learning about business ethics to prepare students to effectively address ethical dilemmas in practice. We discuss specific learning activities and assessment items that can help to facilitate internalization of learning, including industry guests, case studies, reflective journals and role-plays. Here, we relate our experiences implementing these in the classroom and consider the strengths and weaknesses of each. We conclude with a discussion of the challenge of developing ethical students.