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The frequent reliance of students on generative AI tools in Pakistan’s Higher Education Institutions (HEIs) has intensified issues concerning academic integrity due to unacknowledged AI authorship, cognitive offloading on AI tools, incorrect factual information and citations generated by AI. These challenges are amplified by limited digital literacy, insufficient institutional regulations directing AI use as a learning partner, and a fragmented understanding of ethical issues arising from excessive AI use among university students. This study addresses this gap by systematically developing an AI Literacy (AILP) for a public-sector university in Pakistan. The study reports development of Students’ Learning Outcomes (SLOs) for AILP by using a sequential mixed-methods design across three research phases. Two evidence bases were generated by following a Systematic Literature Review (SLR) of selected literature (n=56). These included the key literacies essential for responsible interaction with AI and a lexicon of ethical issues often resulting in academic integrity challenges. Emerging themes were identified through subjecting the lexicon to bibliometric co-occurrence analysis using VOSViewer. The SLOs were drafted in line with backward design principles and validated by a team of experts in four iterative review cycles using Delphi review process. The final version of SLOs presented 86% consensus among reviewers and provided a curricular foundation for a hands-on, activity-based curriculum divided into four modules. The AILP will be delivered as a mandatory 0-credit course starting Fall26 through the Moodle learning management system, making this program Pakistan’s first mandatory AI literacy course for university students, developed with an aim of creating more aware and proficient users of AI. This study provides a blueprint for contextualizing AI literacy into an actionable, scalable pedagogical intervention for students across age groups. This study is particularly generalizable for resource-constrained and policy-sparse educational environments. Keywords: AI Literacy, Academic Integrity, bibliometric co-occurrence analysis, Delphi review