As generative AI continues to reshape creative industries, AI fashion design is transforming traditional design workflows by facilitating automated trend analysis, concept generation, and rapid prototyping. While these capabilities offer new possibilities for enhanced efficiency and innovation, consumer responses to AI fashion design are mixed and complex. This paper reviews the literature to comprehensively discuss how and why consumers respond to AI fashion design, drawing on the major theoretical frameworks such as schema theory and mind perception theory. Consumer responses are shaped by general schematic beliefs about AI, perceptions of AI as a designer compared to humans, the characteristics of the final design, and individual consumer characteristics and tendencies. In addition, framing and implementation of AI design play a critical role in influencing consumer perceptions of authenticity, emotional value, creative depth, and AI-augmented artistic expressions. These factors highlight that the interplay between schematic beliefs, mind perceptions, final design characteristics, consumer tendencies, and AI implementation formats collectively shape consumer responses to AI fashion design. Despite growing academic and industry interest, little research has explored the role of ethical aspects. Key issues include transparent communication about AI-assisted processes, authorship and credit for training images, and ownership of AI-created designs, which calls for comprehensive frameworks. Ultimately, this paper highlights the importance of understanding these complicated dynamics in order to shape responsible practices, establish consumer trust, and develop sustainable approaches in the evolving landscape of AI fashion design.