The rapid integration of artificial intelligence (AI) into business necessitates a curricular shift in management education toward practical AI literacy. This study addresses the gap between the availability of AI tools and students’ ability to leverage them effectively. It evaluates a structured prompt engineering intervention designed to improve undergraduate business students’ AI self-efficacy, foundational AI knowledge, and practical prompting skills. Using a mixed-methods, pre-test/post-test design, the study included 78 undergraduate business administration students at a university in Gujarat, India. Participants engaged in a workshop that introduced advanced prompting strategies for business applications. Data were collected via a validated AI Self-Efficacy Scale, an AI Knowledge Assessment, and a Prompt Engineering Skill Rubric. The findings show statistically significant improvements in AI knowledge and self-efficacy, corroborated by qualitative evidence of enhanced prompt sophistication. The results underscore the intervention’s efficacy in cultivating essential AI competencies. This research offers a replicable pedagogical framework for integrating prompt engineering into business curricula, providing key insights for educators seeking to prepare future professionals for an AI-driven landscape.