Purpose: This study examines the impact of AI-generated advertisements on consumer trust among residents of Coimbatore, Tamil Nadu, a major industrial and technological hub in South India. Methodology: A mixed-methods research design was employed, combining survey data from 384 consumers across Coimbatore with 20 in-depth interviews. The study analyzed consumer awareness, trust levels, perceived authenticity, and behavioral responses to AI-generated advertising content across different media platforms. Findings: Results revealed that 73.2% of Coimbatore consumers have encountered AI-generated advertisements, with 47.8% unaware that AI was involved in content creation. Trust levels varied significantly by ad type—AI-enhanced product images (mean trust 3.68/5) scored higher than AI-generated text (3.42/5) and AI-created videos (3.21/5). Transparency emerged as the strongest predictor of consumer trust (β = 0.51, p < 0.001), followed by cultural relevance (β = 0.38, p < 0.01) and perceived authenticity (β = 0.34, p < 0.01). Privacy concerns (64.7%) and lack of disclosure (58.3%) were identified as primary trust barriers. Coimbatore consumers demonstrated higher trust in AI-generated content (47%) compared to global averages (34%), aligning with national trends showing Indian consumers' openness to AI advertising. Practical Implications: The study recommends mandatory disclosure of AI-generated content, integration of Tamil language and cultural elements, transparency about data usage, and consumer education initiatives. Originality: This research provides the first systematic examination of AI-generated advertisement impact on consumer trust in Coimbatore, contributing region-specific insights to the growing literature on AI advertising in emerging markets.