ABSTRACT: This narrative literature review examined the psychological, social, and behavioral drivers influencing Generation Z’s engagement with social media advertising. Interdisciplinary research from marketing, communication, psychology, and digital sociology was synthesized to assess the roles of identity formation, perceived authenticity, parasocial interaction, social comparison, and emotional mechanisms in digital persuasion. Findings showed that Gen Z’s advertising responses were strongly shaped by identity expression, relational trust, and algorithmically mediated social environments. Authenticity cues and influencer relationships influenced engagement and consumer attitudes, while persistent scarcity and fear-of-missing-out appeals contributed to digital fatigue and reduced well-being. By integrating fragmented literature, this review advanced a cohesive framework for understanding Gen Z’s digital advertising responses and offered implications for ethically informed communication strategies. KEYWORDS: Generation Z, social media advertising, identity formation, perceived authenticity, parasocial interaction, social comparison, influencer marketing, digital persuasion