While recent years have witnessed increasing theoretical and empirical elaboration on the construct of teacher feedback literacy in higher education and second language education, little research has investigated the development of teacher feedback literacy, especially when teachers collaborate in an attempt to improve feedback strategies with technology. To fill this gap, the present study examined two L2 writing teachers taking the initiative to create, update, and implement a human-computer-automatic writing evaluation (AWE) integral feedback platform, and how such a feedback innovation process impacted their feedback literacy development. The analysis of multiple sources of data, including semi-structured interviews, stimulated recalls, class observation, and artifacts, revealed that the two teachers approached the innovation by orchestrating mediating tools, interacting dialogically with social agents, reflecting critically, and crossing boundaries. Through this process, the development of teacher feedback literacy occurred at varying rates across different aspects. Specifically, positive changes were effected in the teachers’ feedback thinking as well as feedback giving and sharing practices. However, the teachers’ feedback literacy in classroom practice did not seem to have generated as salient a positive outcome. Possible reasons are discussed regarding the scope of the feedback innovation and contextual constraints, and implications are offered. The study underscored L2 writing teacher feedback literacy as a developmental phenomenon molded by situated social practice.