Through a PRISMA-guided systematic literature review of peer-reviewed publications (2021–2025), this study mapped the conceptualization, implementation pathways, and empirical evidence of AI literacy in higher education, drawing on a screened corpus of 56 peer-reviewed publications. Three research questions guided this review: (1) how AI literacy is conceptualized in higher education; (2) what effective pathways have been implemented for developing AI literacy among students and educators; and (3) what empirical evidence reveals about AI literacy levels, dimensions, and interdimensional relationships among students and educators. Findings reveal that conceptual fragmentation persists in definitions, frameworks, and dimensions (RQ1), with cognitive and behavioral dimensions more frequently emphasized than affective and ethical dimensions. This pattern is reflected in implementation pathways (RQ2), where many initiatives emphasize operational proficiency, tool use, and prompting, while critical reflection, ethical engagement, and longer-term developmental outcomes receive less consistent attention. Empirically (RQ3), student-focused studies commonly report moderate overall AI literacy, whereas educator-focused studies indicate readiness concerns in several higher-order, pedagogical, and ethical domains; because measures, samples, and contexts differ across studies, these findings should not be interpreted as a direct statistical comparison between populations. Several studies also indicate interrelationships among the four ABCE dimensions, behavioral engagement and ethical understanding mediated an affective-to-cognitive pathway. Taken together, the findings suggest the need to move beyond narrowly tool-oriented approaches toward theoretically grounded, dimensionally balanced, critically engaged, and longitudinally sustained AI-literacy development, with implications for higher-education policy, curriculum design, and professional development. Not applicable.
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