This qualitative study explored the perspectives of Vietnamese English as a Foreign Language (EFL) teachers on the implementation of competency-based assessment (CBA) within the higher education context. Amidst the global shift towards competency-based education, this research aimed to understand how instructors in Vietnam navigate the challenges and opportunities presented by CBA, focusing on its impact on teaching practices and student learning. The objective of this study was to examine the adaptations and responses of EFL teachers to the implementation of CBA, identifying how these adaptations influence teaching effectiveness and student learning experiences. Employing semi-structured interviews with 10 EFL teachers from two institutions, the study was grounded in constructivist and social constructivist theoretical frameworks, facilitating a nuanced exploration of the participants’ experiences. The findings revealed several key themes: significant challenges in transitioning to CBA, including adapting to new methodologies and a lack of resources; the transformative potential of CBA for enhancing student engagement and learning outcomes; the need for targeted professional development to bridge the gap between theoretical knowledge and practical implementation skills; and the role of CBA in fostering critical thinking, problem-solving skills, student autonomy, and inclusivity. Additionally, the study highlighted the complexities of providing effective, individualized feedback within CBA frameworks. The discussion underscores the importance of these findings in informing the development of more effective competency-based educational strategies and highlights recommendations for enhancing teacher training and assessment design to better support competency development. These insights contribute to the discourse on competency-based language education, suggesting implications for policy, practice, and future research. By highlighting the specific challenges and strategies employed by Vietnamese EFL teachers, this study offers valuable perspectives for instructors, policymakers, and researchers aiming to advance the implementation of competency-based assessment in language education globally.