Enhancing AI Literacy through Immersive VR: Evaluating Pedagogical Design and GenAI Integration

As AI continues to reshape industries, enhancing AI literacy is crucial for empowering learners to interact confidently and critically with emerging technologies. Virtual Reality (VR) offers a way to bridge theoretical knowledge with practical application but integrating VR into educational settings struggles with technical and pedagogical challenges. This study investigates how immersive VR environments can be optimized to enhance AI literacy and identifies key factors driving students' intent to adopt these technologies. Using Classlet - a VR platform that integrates interactive multimodal tasks, narrative-driven activities, and GenAI avatar interactions - we created a virtual office where learners engaged in research tasks and simulation scenarios with instructor-customized prompts. Our mixed-methods approach, involving participants from Hong Kong and Malaysia, focused on AI literacy within contexts such as Fast Fashion and European society. Regression analyses revealed that overall intent is strongly predicted by composite enjoyment, perceived performance, and behavioral control (R² = 0.803). Post-AI literacy self-assessments were predicted by AI self-efficacy and enjoyment ( R² = 0.421). However, female participants reported lower scores on AI efficacy (p = 0.042), suggesting baseline differences that warrant further investigation. Qualitative insights show the immersive and engaging nature of the experience while highlighting the need for further GenAI prompt designs for elaborative and bidirectional interactions.