Aim/Purpose: This study explores the Knowledge, Attitude, and Perception (KAP) towards ChatGPT among university students and faculty. It also examines the faculty’s readiness to cope with the challenges and leverage the opportunities presented by AI-powered conversational models. Background: Launched on November 30, 2022, ChatGPT took the world by storm with its capability to generate high-quality written expressions in a conversational manner. The reactions to this innovation varied, from enthusiasm regarding its potential to enrich students’ learning to concerns about its threat to students’ cognitive development and academic integrity. A systematic exploration of students’ and faculty’s KAP towards ChatGPT can play an important role in addressing the multifaceted dimensions of AI-driven conversational models. Methodology: This study employs a cross-sectional survey research design based on questionnaires distributed to 145 faculty members, as well as 855 undergraduate and graduate students at the ESPRIT School of Engineering and School of Business. The student sample was based on stratified and convenience sampling, while the faculty sample was based on a consensus sampling approach. Contribution: To the best of our knowledge, this is the first reported study that contributes to understanding the KAP of students and faculty towards ChatGPT, as well as the readiness of faculty to effectively adopt AI-driven conversational models. Furthermore, our research contributes to the body of knowledge by taking Vygotsky’s (1978) principle of social interaction and its role in promoting cognitive development to a new level by hypothesizing that if students were to acquire the competencies to actively engage with AI-driven chatbots in meaningful discussions and collaborative conversations, they might be able to develop some higher-order thinking skills further. Findings: Our results indicated that faculty demonstrated a higher level of ChatGPT knowledge than students and that more than 40% of surveyed students and faculty expressed some trust in the reliability of ChatGPT’s responses, a perception that does not align with reality. Faculty attitude towards ChatGPT was comparatively more reserved compared to that of students and showcased varying opinions. Furthermore, the surveyed faculty showcased a more negative perception of ChatGPT than students, and they expressed a greater degree of skepticism. Our research revealed that 63.4% of surveyed faculty reported that they lack the requisite training and resources to integrate ChatGPT into their pedagogical practices. Recommendations for Practitioners: HEIs should take appropriate measures to enhance students’ and faculty’s knowledge, attitude, and perception regarding ChatGPT to stimulate ethical, meaningful, innovative, and engaging interactions and learning experiences. Recommendation for Researchers: Our study has shed light on some moderating factors that shape the acceptance of AI-driven conversational models and some adoption barriers. It delves into the perceptions, biases, and misconceptions held by both students and faculty, thereby providing a basis for future investigations on the effective integration of AI-driven conversational models in higher education. Impact on Society: This research provides new insights that can harness the potential merits of ChatGPT in enhancing students’ learning while mitigating potential pitfalls. It suggests facilitating open forums and dialogues among students, faculty, employers, and other key stakeholders to debate the impact of AI-driven conversational models on students’ learning and faculty’s teaching and assessment. Future Research: We invite researchers to conduct cross-cultural studies on this topic while also taking into consideration a qualitative research design approach. Future research can also test the hypothesis that AI-driven conversational models inhibit critical thinking by facilitating the passive consumption of information.