The integration of Artificial Intelligence (AI) into healthcare has significantly enhanced diagnostic precision, treatment strategies, pharmaceutical advancements, and hospital management. This review examines the role of AI in medical imaging, drug discovery, robotic surgery, epidemiology, and clinical decision-making. Techniques such as deep learning and natural language processing (NLP) have exhibited exceptional proficiency in interpreting medical images, forecasting disease trajectories, and optimizing healthcare infrastructure. Furthermore, the incorporation of AI into electronic health records (EHRs) and wearable health monitoring technologies has strengthened patient management and facilitated early disease identification. Despite these technological strides, several challenges remain, including concerns about data security, interpretability of AI models, biases in algorithms, and ethical dilemmas. Adherence to regulations such as HIPAA and GDPR is essential to maintaining patient data confidentiality. Additionally, efforts to improve AI fairness and transparency are crucial in fostering confidence among medical practitioners and patients. Future developments in medical AI are anticipated to be driven by advancements in multimodal AI, federated learning, and generative AI. Rather than displacing human expertise, AI will act as a complementary tool, equipping healthcare professionals with data-driven insights to refine clinical decision-making. Ensuring sustainable AI deployment and fostering international collaboration will be pivotal in making AI-driven medical solutions accessible and equitable. This paper provides an extensive review of AI's present applications, challenges, and future potential in medicine, highlighting its contributions to precision healthcare and improved patient outcomes.