Literacy practices focus classroom assessment skills and knowledge. This study investigated the correlation of classroom assessment literacy and practices of teacher educators in Pakistan. Teacher educators of Punjab and Khyber Pakhtunkhwa, Teacher education institutions were investigated through Assessment Literacy Test (ALT), Classroom Assessment Practices Questionnaire (CAPQ) following quantitative correlational research design. The results reflected moderate level assessment literacy of teacher educators in Pakistan and found them practice traditional assessment practices. Furthermore, majority of teacher educators were found to have less knowledge and skills in designing and selecting appropriate assessment tools and that most of the classroom assessment practices were limited to paper-pencil tests. Teacher training with mutual consultation of Learning and Innovation Division (LID) of Higher Education Commission (HEC), the establishment of National Assessment Wing under the Umbrella of National Curriculum Wing and support from ICT supported devices/software, online resources were recommended.