This paper presents a systematic review of the role of Artificial Intelligence (AI) in healthcare, highlighting its applications and challenges. AI technologies, including machine learning, natural language processing, and computer vision, are revolutionizing healthcare through diagnostic assistance, treatment personalization, patient monitoring, optimization of healthcare operations, and public health management. These technologies enable faster and more accurate disease detection, personalized treatment plans, and improved operational efficiency. Despite the potential benefits, the integration of AI in healthcare faces significant challenges, such as data privacy and security concerns, ethical and legal issues, interoperability and integration difficulties, scalability and accessibility obstacles, and the complexities of human-AI interaction. This review emphasizes the need for robust cybersecurity measures, ethical frameworks, universal standards for interoperability, and equitable access to AI technologies. Recommendations for overcoming these challenges include fostering interdisciplinary collaboration, enhancing healthcare professional education, and promoting research and development. By addressing these challenges, AI can realize its full potential in enhancing healthcare delivery and patient outcomes.