The present study investigated Iranian EFL teachers' alternative assessment literacy (AAL). The study employed a sequential explanatory mixed methods design, including qualitative and quantitative approaches. To achieve more accurate results, the AAL inventory (Mertler & Campbell, 2005) and an interview with ten teachers (to explore their challenges) were used to collect the data. The study participants were 306 Iranian TEFL teachers teaching English in different language institutes in Tehran. The study results revealed that Iranian EFL teachers enjoyed moderate knowledge of AAL. Also, their beliefs in employing AAL standards in L2 classroom assessment and its related methods were valuable and appreciated presenting their awareness of the issue. In addition, they claimed to have used specific alternative assessment related strategies and practices in the L2 classroom. The findings imply that EFL teachers' AAL is inadequate as they cannot perform well in practice, while theoretically, they are knowledgeable enough. Therefore, continuous in-service training programs on educational assessment and AAL should be considered to cater to teachers' assessment literacy problems in the Iranian context.