Artificial Intelligence (AI) literacy has emerged as a critical competency in modern higher education, enabling students to effectively understand, evaluate, and utilize AI-based systems for academic and professional purposes. With the rapid integration of intelligent technologies such as generative AI tools, adaptive learning systems, and automated decision-support platforms, educational readiness has become an essential factor for successful learning adaptation. Educational readiness refers to the preparedness of students to adopt, understand, and effectively engage with AI-driven learning environments. The present study investigates the relationship between Artificial Intelligence literacy and educational readiness among students in higher education institutions. A quantitative cross-sectional research design was employed involving undergraduate and postgraduate students. AI literacy was measured through dimensions such as conceptual understanding of AI, practical usage skills, ethical awareness, and confidence in AI tools, while educational readiness was assessed through adaptability, learning motivation, digital preparedness, and technology acceptance. Descriptive statistics and correlation analysis were applied to examine the relationship between variables. The findings reveal a moderate to high level of AI literacy among students and a significant positive relationship between AI literacy and educational readiness. Students with higher AI literacy demonstrated greater readiness to engage with AI-based educational systems, improved adaptability, and stronger learning motivation. The study concludes that enhancing AI literacy is essential for improving educational readiness and recommends integrating AI education modules into higher education curricula to promote effective and responsible use of artificial intelligence in learning environments.