Concerns regarding vulnerability to misinformation and fake news have been raised by the rapid adoption and emergence of artificial intelligence (AI) in digital media, which has changed the journalism landscape. When juxtaposed against the lack of digital literacy, the spread of fake news across new media platforms poses a more serious challenge. The present study employed the Uncanny Valley effect to evaluate the impact of real photos versus AI-generated images on the perceived trustworthiness of real versus fake news. An experimental study was conducted with 155 participants who were presented with four combinations of stimuli: real news with a real photo, real news with an AI-generated image, fake news with a real photo, and fake news with an AI-generated image, in a randomized order. While the results did not show significant interaction effects between the type of news and the accompanying image, the main effects for the image were found to be significant. Real photos elicited higher trustworthiness compared to AI-generated images in the total sample, irrespective of whether the news was real or fake. The scores of participants across three age groups were also compared to understand how age affects the trustworthiness of news with AI-generated images. Results showed that participants aged between 40 to 50 years showed higher trust in AI-generated images compared to their younger counterparts (18 to 30 years old). The study's findings underscore the impact of accompanying images on determining the trustworthiness of news items. The study has implications for designing media awareness drives and digital literacy curriculum in the context of aspects like vulnerability to fake news and literacy about AI-generated content, especially among the digitally non-natives.