The rise of generative artificial intelligence (GenAI) is reshaping higher education worldwide. While GenAI offers opportunities for personalized learning and innovative teaching methods, it also presents risks such as academic dishonesty and plagiarism. This underscores the need for effective pedagogical practices to ensure students achieve the expected learning outcomes. Given GenAI's significant impact on learning and teaching in higher education, designing authentic pedagogical practices, teaching methods, and assessments is crucial. These practices ensure that students benefit from GenAI while still meeting the expected learning outcomes. This study conducts a systematic literature review to identify themes in published articles on the use of GenAI in engineering and project management higher education. The literature search was limited to peer-reviewed journal articles and refereed conference proceedings and written in English between 2022 and 2025 which resulted in 191 articles. The titles and abstracts of 191 articles were read which were relevant to the review’s aim in the context of engineering and project management higher education and reduced the number of articles to 69. Out of 69 geographically and contextually diverse articles, 46 met the inclusion criteria. These articles were categorized into the following key themes: the tendency of students to use GenAI, the potential benefits and challenges of using GenAI, the pedagogical shift in higher education, the impact of GenAI on educators’ practices, and the ethical use of GenAI. Finally, this study offers recommendations for using GenAI in pedagogical practices amidst technological advancements.