<p>The expansion of Artificial Intelligence (AI) within the current organizational environments has increased at a very high rate and it has brought about the concerns of job automation, self-employment, among others that affect the performance of employee. With the gradual rise of AI systems to supplement or replace employees, employees’ employability is no longer guaranteed, therefore, there is a need to explore the psychological processes involved in the above transitions. This paper also tests the mediation of psychological well-being between AI and job insecurity on work performance. The method used in the study was quantitative research with the help of cross-sectional self-administered questionnaires to assess job insecurity, psychological well-being and work performance among IT sector employees. To assess the relationships specified in the hypotheses, Partial Least Squares Structural Equation Modeling (PLS-SEM) was adopted with the aid of SMART PLS version 4.0. According to the results, AI-generated job insecurity has a substantial negative effect on organizational performance especially through its effect on the psychological health of the employees. This research is beneficial in enriching the knowledge base by providing the psychometric data on the relationship between AI job insecurity and work performance. The study underlines the role of psychological approach as one of the key areas to combat the negative impact of technological disruption and offers implication for practice for organizations that want to design interventions to support psychological needs. Organizations should promote mental health and employee resilience to help staff effectively navigate the challenges of AI adoption while maintaining productivity and engagement. </p>