With the boom of generative Artificial Intelligence (AI) tools in the past few years, the impact of those tools in education is undeniable. Besides the benefits of AI in reducing lesson planning and content design, teachers also face significant challenges in maintaining fairness and validity in testing and assessment. Through a mixed-methods approach employing a survey questionnaire and semi-structured interviews, this study aims to investigate teachers’ conceptual change in testing and assessment in the context of AI boom in terms of their perceptions of AI’s general effects on assessment, the things that motivate or hinder teachers’ use of AI, their concerns about the use of AI, and the process in which their conceptual change occurred. The research findings show that teachers demonstrate different levels of conceptual change because they understand AI assessment transformation potential, yet lack knowledge about sophisticated AI-based methods. The biggest concerns among the participants include a lack of digital proficiency as well as a fear of reduced teacher agency and academic integrity, which also suggests the need for additional measures to enhance teacher AI literacy, foster ethical use of assessment, and support pedagogical innovation. The concerns indicate that their conceptual change process remains in progress. This research contributes to understanding how educators can effectively navigate the evolving demands of testing and assessment in a rapidly digitizing educational landscape.