Background: Digital health technologies, spanning mobile applications, telemedicine, and AI-driven platforms, are rapidly reshaping healthcare delivery globally. Although Generation Z university students are classified as digital natives, empirical data evaluating their eHealth literacy, technology acceptance, and specific trust barriers in developing South Asian nations like Sri Lanka remain scarce. Objective: This study evaluated eHealth literacy, technology acceptance, online health information-seeking behaviors, and adoption barriers among Gen Z undergraduates in Sri Lanka, focusing on the interplay between eHealth literacy, AI trust, and digital care preferences. Methods: A cross-sectional survey (N = 172) was conducted among Sri Lankan university undergraduates utilizing adapted, validated instruments: the eHealth Literacy Scale (eHEALS) and the Technology Acceptance Model (TAM). Statistical analysis included scale reliability validation (Cronbach's alpha), descriptive profiling, Chi-Square ({chi}{superscript 2}) contingency tests, Pearson correlations, and Multiple Linear OLS Regression models. Results: Participants demonstrated high overall eHealth literacy (Mean = 3.84 {+/-} 0.58) and strong endorsement of digital health utility (Mean = 3.99 {+/-} 0.59). Online health searches were reported by 86.6% of respondents. AI tools (e.g., ChatGPT, Gemini) emerged as the second most frequent source for health queries (57.6%), surpassing YouTube (44.2%) and social media (26.2%), with medical students showing significantly higher AI utilization ({chi}{superscript 2} = 8.70, p = .003). In multiple regression analysis, digital platform preference over physical clinic visits (R{superscript 2} = .352, p < .001) was significantly predicted by Perceived Ease of Use ({beta} = 0.371, p = .001) and Trust in AI Recommendations ({beta} = 0.370, p < .001), whereas face-to-face consultation preference (76.7%) and personal data privacy risks (50.0%) remained predominant adoption barriers. Conclusion: Gen Z students in Sri Lanka exhibit high digital health readiness and substantial reliance on AI-driven information seeking. However, institutional deployment must address privacy concerns and integrate hybrid clinical workflows to bridge the gap between high perceived utility and physical consultation preferences.