Drawing from the cognitive appraisal theory of stress, this study constructs a theoretical model that AI awareness affects radical creativity through the interaction modes between employees and AI. By examining the internal mechanism of AI awareness on employee radical creativity, this paper not only clarifies the driving and inhibiting factors of employee radical creativity, but also explores the boundary conditions of organizational rewards for creativity. The analysis of 191 leader-employee pairs revealed that AI awareness negatively affects employee radical creativity through AI automation, while positively affecting employee radical creativity through AI augmentation. Meanwhile, organizational rewards for creativity negatively moderated the relationship between AI awareness and AI automation. When the employees’ perceived rewards for creativity are higher, the weaker the positive relationship between AI awareness and AI automation, which is more conducive to employee radical creativity. This study expands the influence of AI awareness while enriching the research on antecedents of radical creativity, which provides recommendations for enterprises to leverage the strengths of AI.