The field of AI ethics during the current and previous decade is receiving an increasing amount of attention from all involved stakeholders: the public, science, philosophy, religious organizations, enterprises, governments, and various organizations. However, this field currently lacks consensus on scope, ethico-philosophical foundations, or common methodology. This thesis aims to contribute towards filling this gap by providing an answer to the two main research questions: first, what theory can explain moral scenarios in which AI entities are participants?; and second, what (...) theory can explain the process of moral reasoning, decision and action, for AI entities in virtual, simulated and real-life moral scenarios? This thesis answers these two research questions with its two main contributions to the field of AI ethics, a substantial and a methodological contribution. The substantial contribution is a coherent and novel theory named Ethics of Systems Framework, as well as a possible inception of a new field of study: ethics of systems. The methodological contribution is the creation of its main methodological tool, the Ethics of Systems Interface. The second part of the research effort was focused on testing and demonstrating the capacities of the Ethics of Systems Framework and Interface in modeling and managing moral scenarios in which AI and other entities participate. Further work can focus on building on top of the foundations of the Framework provided here, increasing the scope of moral theories and simulated scenarios, improving the level of detail and parameters to reflect real-life situations, and field-testing the Framework on actual AI systems. (shrink)