Integrating Artificial Intelligence (AI) and the Internet of Things (IoT) is transforming modern homes through advanced automation systems. This research explores the development of a smart home automation system that leverages AI algorithms and IoT sensors to enhance energy efficiency, security, and user convenience. The proposed system enables seamless control of home appliances such as lighting, temperature regulation, and security systems. By utilizing machine learning, the system learns user preferences and adapts accordingly, offering personalized automation. Voice recognition and mobile applications simplify interaction, allowing remote and hands-free control. The system also addresses device compatibility, privacy concerns, and technical complexity challenges. The results show that AI-driven automation can significantly improve the quality of life, reduce energy consumption, and enhance home security, paving the way for future advancements in innovative living environments.