Artificial intelligence (AI) revolutionizes healthcare by enhancing diagnostic accuracy, optimizing treatment protocols, also streamlining administrative workflows. This review synthesizes recent advancements in AI applications across disease prediction, medical imaging, robotic surgery, personalized medicine, and healthcare analytics, while critically evaluating ethical, legal, and technical challenges. A systematic literature review of 75 peer-reviewed articles (2013–2023) from IEEE Xplore, PubMed, and ScienceDirect reveals that convolutional neural networks (CNNs) and natural language processing (NLP) are driving innovations in medical imaging and clinical decision support. Case studies, like Google DeepMind’s retinal disease detection and IBM Watson for Oncology, underscore AI’s potential to reduce diagnostic errors by 30–50%. However, challenges persist in algorithmic bias, data privacy, and model interpretability. Federated learning and explainable AI (XAI) are emerging solutions that fill these gaps. Finally, future directions include the integration of AI with wearable devices to provide proactive care with aid from genomic data. Multidisciplinary collaboration for creating the standard frameworks of AI governance is argued in this paper to ensure equitable and ethical AI deployment in the global healthcare systems. Medical applications of AI can increase the efficiency of decision-making and management of care operations. We serve to review recent literature on AI applications in healthcare to deal with their potential ethical, legal, and technical challenges. The literature review was conducted systematically, using peer-reviewed articles (2019-2023) published from IEEE Xplore, PubMed, and ScienceDirect. Studies related to the use of AI in healthcare were included in the criteria. Studies about cybersecurity, AI in business, or non-English languages were excluded from the criteria. Studies that did not provide enough information to be included in the analysis were excluded. The review focused on applications of AI in predicting diseases, aiding medical imaging, assisting robotic surgery, enabling personalized medicine, and supporting healthcare analytics. We also explored the ethical, legal, and technical challenges of AI in healthcare. CNN and NLP are driving innovations in medical imaging and clinical decision support.