We are living in an era where technological advancements and data-driven systems deeply shape human behavior and decision-making. Among these developments, artificial intelligence (AI) has emerged as a key driver of digital transformation, rapidly surpassing the influence of earlier technologies such as computers and the internet. AI's growing presence has led to significant changes in individual practices and societal structures, while simultaneously raising concerns about privacy, algorithmic bias, and ethical accountability. Public discourse increasingly focuses on the dual nature of AI—as both a catalyst for innovation and a potential source of harm. Issues such as opaque decision-making, data misuse, and the reproduction of historical discrimination through machine learning systems illustrate the urgent need for critical engagement. In this evolving landscape, societies are transitioning from “AI immigrants” to “AI natives,” yet a substantial knowledge gap persists. This chapter argues that AI literacy—encompassing cognitive, ethical, and technical competencies—is not a luxury but a necessity for informed participation in AI-driven environments. It explores AI literacy as a conceptual framework to equip individuals with the skills to evaluate, use, and question AI technologies critically. Ultimately, fostering AI literacy is essential for minimizing risks, empowering users, and maximizing the societal benefits of intelligent systems.