Digital transformation in manufacturing represents a strategic evolution beyond digitization and digitalization, aiming to redefine industrial processes through the integration of intelligent technologies, such as artificial intelligence (AI). This chapter explores how the integration of AI facilitates this transformation within the frameworks of Industry 4.0 and Industry 5.0 (I5.0). While the main theme of Industry 4.0 is the promotion of automation and smart manufacturing, in I5.0, emphasis is focused on human centricity, resilience, and sustainability, emerging new challenges over traditional implementations. Through critical literature review and the presentation of real-life industrial case studies, the organizational, operational, and technological aspects of digital transformation are examined, with special attention to challenges faced by small and medium-sized enterprises (SMEs). The analysis is framed within the Technology Organization Environment (TOE) model, addressing the need for adaptable and inclusive transition strategies. Furthermore, the contribution of this chapter extends to the provision of a roadmap for AI-enabled digital maturity, promoting resilient, low-carbon, and human-aligned manufacturing systems. The discussion aligns with the priorities of the AI, Data, and Robotics Partnership and supports the strategic objectives of Europe’s digital and green transitions.