Indonesia, the fourth most populated country in the world, has experienced a fivefold increase in Human Immunodeficiency Virus (HIV)‐infected individuals since 2001. Little is known about health literacy in people living with HIV (PLHIV) in Indonesia. This study aimed to determine the level of health literacy among PLHIV in Indonesia and assess associations between sociodemographic variables, beliefs about medicines, stigma and health literacy. We conducted a cross‐sectional study using questionnaires in PLHIV in Papua, Indonesia. The short version of the Test of Functional Health Literacy in Adults (S‐TOFHLA), Beliefs about Medicines Questionnaire (BMQ) and HIV stigma scale as well as questions on demographic information were completed by the participants from two hospitals in Papua, Indonesia. In a multivariate logistic regression analysis, we assessed the association between sociodemographic variables, stigma, beliefs about medicine and low health literacy. Overall, 331 participants were included, 62.0% female, 67.0% Papuans. A total of 38.5% of participants had low health literacy. PLHIV with multi‐dose regimen were less likely to have low health literacy than those taking a fixed‐dose combination (OR = 0.51; 95%CI = 0.32–0.82). PLHIV who had social support in medicine‐taking were more likely to have low health literacy (OR = 1.78; 95%CI = 1.07–2.97). More awareness about medication overuse (OR = 1.17; 95%CI = 1.06–1.29) and medication harm (OR = 1.10; 95%CI = 1.01–1.20) were also associated with having low health literacy. Overall, interventions targeting health literacy may be a promising strategy to improve self‐management.