ABSTRACT This research aims to explain whether the use of Artificial Intelligence (AI) by employers fosters or hinders employee innovative behaviour. Incorporating the Yin-Yang perspective as the overarching framework and integrating the cognitive appraisal perspective, we propose a curvilinear effect between AI usage and innovative behaviour, resulting from opposing Yin and Yang pathways. AI usage can influence two regulatory states of employees: challenge appraisals and hindrance appraisals. These, in turn, affect their innovative behaviour in opposite directions. In a multi-wave survey study, we found that AI usage had a positive U-shaped curvilinear effect on innovative behaviour, which we term the ‘Getting Better’ effect. This indicates a positive indirect effect of AI usage on innovative behaviour through challenge appraisals. In contrast, an experiment revealed an inverted U-shaped curvilinear effect of AI usage on innovative behaviour, which was the ‘TMGT (Too Much of a Good Thing)’ effect. This highlights a negative indirect effect of AI usage on innovative behaviour through hindrance appraisals. Furthermore, our research suggests that higher self-efficacy can weaken the negative indirect effect of AI usage on innovative behaviour through hindrance appraisals. We discuss theoretical contributions and practical implications for individuals and organizations.