As artificial intelligence becomes increasingly integrated into educational practice, educator preparation programs face growing pressure to determine how best to prepare future teachers for AI-enabled classrooms. At the same time, teacher candidates are expressing a desire for more learning opportunities related to AI and its role in teaching and learning. This presentation describes the design and implementation of an AI literacy module within a graduate teacher preparation program that was developed in response to candidate demand and grounded in the concept of professional judgment. Rather than focusing solely on tool use, the module engaged candidates in critically evaluating AI-generated content, considering ethical implications, identifying limitations and biases, and making instructional decisions that prioritize learner needs. The session will share the rationale for integrating AI literacy into teacher education, highlight key design principles and learning experiences, and discuss emerging lessons learned. Attendees will leave with practical ideas for incorporating AI literacy into educator preparation coursework while emphasizing professional judgment as an essential competency for future educators.