Generative artificial intelligence (AI) is increasingly utilized in business model innovation (BMI). Large language models support ideation and problem-solving but face challenges such as hallucination and complex reasoning. This study develops ChatBMI, an IT artifact that integrates generative AI into business model development tools (BMDTs) using structured prompts to enhance BMI processes. Following the design science research methodology, we assess existing BMDTs, identify AI leverage points, and implement a structured prompt system. ChatBMI improves business model development by enhancing creativity and reducing reliance on prompt engineering expertise. Our research contributes to innovation literature by demonstrating that structured prompts improve AI performance. We also present a structured approach for BMI prompt generation to guide business model designers in generative AI integration. This study advances AI-driven business model innovation, providing practical insights for academia and industry. Future research should explore AI’s evolving capabilities and broader implications for digital transformation and strategic innovation.