An American Tragedy is a representative work of Theodore Dreiser, an American novelist of realism. This novel, with a vivid description of the protagonist Clyde's brief life, reveals the corruption and destruction of the young generation exerted by the social trends, life style and morality during the transitional period of society. This paper deems that the external cause of Clyde's tragedy is the ethical environment, including the prevailing materialism, money worship the increasing gap between the rich and the poor and the misinterpretation of the “American Dream”, all of which lead to the distortion of Clyde's personal values. Furthermore, the internal cause of his tragedy lies in his lack of ethical awareness and his tendency of being controlled by personal desires. Immersed in pursuit of material comforts and personal pleasures, Clyde violates the traditional ethical norms and challenges the ethical taboos, which leads to his loss of self and hence his tragedy. Therefore, An American Tragedy is not only a tragedy about family, love, law, politics, and religion, but in essence an ethical tragedy. Due to the novel's rich ethical connotation, this paper, from the perspective of ethical literary criticism, explores how the ethical environment affects Clyde's ethical selections by deconstructing the three phases corresponding to the three parts of the novel: Clyde's restless animal factor, his incontrollable free will and the return of his rational will. This paper focuses on how the different combinations and variations of the Sphinx Factor in the process of Clyde's ethical selection cause the ethical conflicts between his free will and rational will, aiming to explain the ethical essence of Clyde's tragedy as well as embody the significance of traditional moral norms in the course of ethical selections.