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In the educational setting of Iran, language assessment literacy (LAL) is still an underexplored issue. This paper investigated the development of LAL among EFL students taking language assessment course at state universities in Iran. The three components of LAL (i.e., knowledge, skills, and principles) were the focus of the inquiry. To collect the required data, a questionnaire, encompassing 83 Likert items and a set of open-ended questions, was developed, and responses from 92 course instructors were collected. Teaching and assessment practices of two course instructors were also observed throughout an educational semester. SPSS (26) was used to analyze the data. Findings revealed that these courses mainly focused on knowledge and skills, overlooking the principles of assessment. Adherence to traditional assessment approaches, use of inappropriate teaching materials, and lack of practical works in assessment also characterized the investigated courses. The paper concludes with suggestions to better design language assessment courses to increase the assessment literacy of English graduates who will probably enter the teaching contexts after graduation.