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Artificial intelligence (AI) has the potential to address significant challenges in education, innovate learning and teaching practices and achieve SDG 4. However, existing literature often overlooks the behavioural aspects of students regarding AI in education, focusing predominantly on technical and pedagogical dimensions. Hence, this study aims to explore the significant relationships among AI literacy, AI usage, learning outcomes and academic performance of generation Z students in the Indian educational context.

The study used structural equation modelling (SEM) on Gen Z students born in the years 1997–2012 as a sample population for the research in the north Indian states like Punjab, Haryana, Himachal and regions like Chandigarh and N.C.R. Delhi.

The results established significant positive relationships between AI literacy, AI usage, AI learning outcomes and academic performance. Specifically, higher levels of AI literacy were associated with increased engagement with AI technologies and tools for learning purposes, leading to better learning outcomes and academic performance. The findings demonstrated that AI literacy plays a crucial role in providing effective learning experiences and fostering skills such as problem-solving and critical thinking among Gen Z students.

The implications of the study include the significance of integrating AI education initiatives into curricula, prioritising professional development programmes for educators and making sure that every student has equitable access to AI technologies.

The study introduces a novel perspective by examining variables such as AI literacy, AI usage, AI learning outcomes and academic performance and developing a model that has not been previously studied. It provides a new discourse and proposes a framework uniquely combining AI-infused curriculum design, educator empowerment, robust assessment mechanisms and sustainable practices.