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The rapid advancement of Artificial Intelligence (AI) has made these technologies readily available for the general public, including education. Stakeholders in education can harness the benefits of AI for personalizing learning, preparing instructional resources, providing feedback, and more. However, they must possess sound knowledge, skills, and dispositions to leverage AI ethically, responsibly, safely, and critically in education. In this regard, this systematic literature review explores the ethical competencies K-12 teachers should encompass for using AI in teaching. The review of 76 empirical studies found that teachers require knowledge, skills, and dispositions competencies to integrate ethics-driven AI literacy education, which are interdependent and co-occur in different contexts. The study draws implications for K-12 teacher preparation in leveraging AI ethically in education.