The rapid growth of Generative Artificial Intelligence (GenAI) in education has ushered in a post-digital era that demands a fundamental rethinking of teacher capabilities, particularly in language instruction. This literature study synthesizes thirty-three scholarly sources to investigate the idea of AI literacy for language educators and its implications for teacher education. The investigation reveals a field that grapples with ambiguous notions of AI literacy, often confusing it with broader digital competencies. Significant gaps in AI literacy have been documented empirically across pre-service and in-service teacher populations worldwide, with consistent weaknesses identified in ethical reasoning, critical evaluation, and pedagogical design of AI-enhanced learning domains required for responsible integration. Although language-specific frameworks are emerging, there is still a serious paucity of empirically proven training models. The review finds a contradiction between instructors' positive sentiments regarding AI and their low self-efficacy in practical applications. Key proposals include incorporating multidimensional AI literacy into teacher education courses, including technological, pedagogical, ethical, and critical dimensions. Furthermore, long-term, collaborative professional development approaches need significant expenditure. The conclusion emphasizes the urgent need to empower language educators as critical designers and ethical guides in the AI-augmented classroom, transforming them from passive consumers to adept practitioners capable of leveraging GenAI's potential while navigating its profound pedagogical and ethical challenges.