This mixed-methods study investigates the relationship between learning-oriented assessment (LOA) literacy and effective teaching among Iranian EFL teachers. LOA integrates assessment with instruction by emphasizing formative feedback, student involvement, and the design of meaningful learning tasks, positioning assessment as a tool to support and enhance the learning process rather than merely measure outcomes. The research consists of two primary phases, a qualitative phase involving semi-structured interviews with EFL teachers to explore their perceptions of LOA literacy and effective teaching, followed by a quantitative phase utilizing a researcher-made and validated Effective Teaching Questionnaire (ETQ) administered to 110 teachers. The study examines how specific LOA components affect teaching outcomes and learner engagement. In the experimental phase, two groups of EFL teachers were formed, an experimental group that received targeted training on LOA literacy and a control group relying on prior knowledge. Both groups completed the ETQ as pretests and posttests. Multivariate Analysis of Variance (MANOVA) revealed significant improvements in posttest scores for the experimental group, indicating that enhanced LOA literacy positively impacts effective teaching practices. By fostering LOA literacy among EFL teachers, educational institutions can enhance teaching effectiveness and student outcomes, advancing a shift toward more responsive and engaging language education.