Background: Nursing is an extremely stressful profession that can lead to compassion fatigue. Psychological capital is largely found to have an immense contribution toward advancing nurses' capacity to deal with stressful situations and protecting them from compassion fatigue. Aim: The study expected to explore the correlation between psychological capital and compassion fatigue among nurses working in Port Said hospitals. Subjects and Method: Design: A descriptive correlational research design was employed. Setting: The study was carried out in eight hospitals in Port Said Governorate namely; El Salam Hospital, El Hayah Port Fouad Hospital, El-Nasr Hospital, El-Zohor Hospital, El-Mesah El-Bahary Hospital, Tropical (Fevers) & Liver Diseases Hospital, El-Ramad Hospital, and Port Said Psychiatric Health and Addiction Treatment Hospital. Subjects: Encompassed a convenience sample of 201 nurses employed in the aforementioned hospitals. Tools: Two instruments were used to collect the necessary data including; Psychological Capital Questionnaire, plus Secondary Traumatic Stress Scale, as well as a Personal and Job Data Sheet. Results: The study publicized that, more than three quarters (80.1%) of the studied nurses had moderate level of psychological capital, and less than two thirds (63.7%) of them had mild level of compassion fatigue. Conclusion: Obviously, a statistically significant negative correlation was found between total scores of psychological capital and compassion fatigue. Recommendations: Designing and applying periodically training programs to advance nurses' perception and skills regarding psychological capital, resilience, effective coping strategies, and stress-control approaches which may decline the prevalence of compassion fatigue.