The integration of generative artificial intelligence (GAI) into higher education is transforming students’ learning processes, academic performance, and psychological well-being. Despite the increasing adoption of GAI tools, the mechanisms through which students’ AI literacy and self-regulated learning (SRL) relate to their academic and emotional experiences remain underexplored. This study investigates how AI literacy and SRL are associated with writing performance and digital well-being among university students in GAI-supported higher learning contexts. A survey was administered to 257 students from universities in China, and structural equation modeling was used to examine the hypothesized relationships. Results show that both AI literacy and SRL significantly and positively predict students’ writing performance, with SRL having a stronger effect. Moreover, AI literacy shows a positive association with GAI-driven well-being, with writing performance serving as a partial mediator in this relationship. These findings suggest that fostering both technological competencies and effective learning strategies may support students’ academic outcomes while supporting their psychological well-being in AI-enriched educational environments. By integrating AI literacy and SRL into a unified model, this study contributes to the growing body of research on GAI-driven well-being in higher education and offers practical implications for cultivating balanced and sustainable learning experiences in the age of GAI.