This study examines the critical role of digital leadership in developing comprehensive technical and vocational competencies, effectively integrating Artificial Intelligence (AI) in Ethiopian Technical and Vocational Education and Training (TVET) institutions, and its contribution to green skill development. Despite the nation's goal of sustainable industrial growth, there is still a significant gap between the technological requirements of the green industrial sector and the current pedagogical outputs. This study uses a quantitative cross-sectional survey technique (N=213) and a post-positivist viewpoint to examine the elements driving institutional transformation. The study evaluates a paradigm that combines the Diffusion of Innovation (DOI) theory, the Technology Acceptance Model (TAM), and the Dynamic Capabilities Theory (DCT). The results show that both organizational effectiveness (β = .820, p < .001) and faculty acceptance (β = .946, p < .001) have significant positive associations with digital leadership. Using 5,000 bootstrap samples and the PROCESS Macro for mediation analysis, it was found that the statistical relationship between green skills development and leadership is mediated by faculty acceptance (β = .650, 95% CI [.555, .734]). This suggests that faculty empowerment serves as the main statistical pathway. This study emphasizes that Ethiopia's green industrial revolution hinges on the human-centric digital transformation of its vocational training systems and offers empirical support for the Addis Ababa Polytechnic Colleges to move from administrative supervision to strategic digital orchestration. This study adds to the body of literature by empirically proving that, rather than being merely a technological or structural intervention, digital transformation in TVET is essentially a leadership-driven, human-centric process where instructor adoption mediates the relationship between leadership and trainee outcomes.