As AI rapidly integrates into corporate operations, more employees are experiencing AI anxiety, which may lead to negative consequences such as pro-organizational unethical behavior. Drawing on the cognitive appraisal theory of stress, this study examines the mechanism through which AI anxiety influences pro-organizational unethical behavior, using 320 two-wave survey responses. The paper also presents a case study of a smart manufacturing firm that implemented an “AI transformation psychological safety intervention program” to alleviate AI anxiety and its adverse effects, offering actionable management strategies.