As artificial intelligence (AI) technologies become widely applied in language learning, AI literacy (AIL) emerges as a crucial construct for conceptualizing learners’ competence to effectively use AI in academic settings. However, its further impact on some key learning factors remains underexplored. Based on social cognitive theory (SCT), this study examines the relationships among AIL, self-regulated learning (SRL), and learning engagement in AI-enhanced English as a foreign language (EFL) contexts. A quantitative analysis with 431 students from China was conducted. Structural equation modeling results indicate that AIL has a significantly positive influence on both SRL and learning engagement. Moreover, SRL plays a significant partial mediating role between AIL and learning engagement. These findings shed light on the mechanisms by which AIL and SRL promote learning engagement, offering practical implications for enhancing engagement and guiding instructional design in AI-assisted language learning environments.