Artificial intelligence (AI) has gained a lot of potential in healthcare. This paper discusses the role and use of artificial intelligence in the healthcare sector, it also explores the various applications of AI and its future scope. AI has assisted in many diseases like COVID-19, chronic kidney disease (CKD), and the spread of various infectious diseases. AI is revolutionizing diagnostics and medical imaging by giving more efficiency and accuracy in analyzing medical images. Using clinical and genomic data to tailor treatment options, it is enabling precision medicine and aids in drug repurposing and new disease prediction. In this paper, we explore how AI has given a boost to medical sectors in the drug discovery and development process by identifying proper drug candidates. AI helps in early disease detection and fast response in controlling the outbreak of infectious diseases. It enhances procedures by enabling surgeons to supervise robots as they perform tasks. AI also contributes to health research and data management by enormous data of patients. Overall, AI can transform how healthcare is provided, enhance patient outcomes, and support the development of a more effective and individualized healthcare system. AI in healthcare presents a lot of challenges currently such as data quality, privacy, biases, lack of transparency, legal and ethical considerations, integration, and usability. Integrating AI systems into existing workflows and infrastructure can be challenging. Therefore, achieving a balance between innovation, regulation, and ethical considerations is essential for leveraging AI’s full potential while ensuring patient safety, privacy, and fairness.