Recent advancements in new technologies, including Artificial Intelligence (AI) and Machine Learning (ML) are revolutionizing healthcare. The healthcare sector has historically lagged in the adoption of digital technologies. However, the COVID-19 pandemic accelerated the pace of their adoption. AI-powered conversational agents like chatbots and virtual assistants, which are computer programs capable of mimicking human conversations, are increasingly being adopted to improve the quality of healthcare services. Conversational agents can increase access to healthcare and improve communications between patients and healthcare professionals. In this paper, we present the result of a systematic literature review that investigated the potential of conversational agents for transforming the healthcare sector. A total of 9,654 papers published between 2019 and 2023 were retrieved from three databases using author-defined search phrases and inclusion/exclusion criteria. Following the screening process, 35 peer-reviewed papers were analyzed using qualitative content analysis. We identified two main categories and eight sub-subcategories as areas where conversational agents could transform healthcare. The two main categories were ‘augmentation of patient care and engagement’, and ‘optimization of clinical workflow and decision support’. The sub-categories include the dissemination of personalized information, chronic disease management and lifestyle integration, automated symptom triage, as well as telemedicine and remote consultation. The results showed that conversational agents have the potential to transform the healthcare sector and enhance the quality of healthcare service delivery.