["European Journal of Education, Volume 61, Issue 2, June 2026. ", "\nABSTRACT\nWith the rapid integration of artificial intelligence (AI) into English as a Foreign Language (EFL) teaching, learner engagement in AI‐driven contexts has become a critical focus. However, limited research has simultaneously examined how EFL learners' self‐efficacy and AI literacy jointly influence their engagement, nor clarified the underlying psychological mechanisms from the perspective of Self‐Determination Theory (SDT). This study aims to investigate the impact of self‐efficacy and AI literacy on EFL students' engagement, and to explore how these constructs satisfy the three basic psychological needs (relatedness, autonomy, and competence) proposed by SDT. A quantitative research design was employed. A total of 489 Chinese EFL learners were recruited. Validated scales were administered to collect data, and Structural Equation Modelling (SEM) was used for analysis. The results revealed that both self‐efficacy and AI literacy have a significant positive impact on EFL learners' engagement. Notably, AI literacy demonstrated a stronger predictive power than self‐efficacy, indicating that technological proficiency plays a more decisive role in sustaining engagement in AI‐driven learning contexts. These findings highlight the importance of fostering technological proficiency and self‐confidence to enhance EFL learners' engagement in AI settings. The study provides practical implications for educational development, syllabus design, and future studies in the field of AI‐assisted language education.\n"]