This paper explores the transformative impact of artificial intelligence (AI) on interior design, examining how AI technologies are revolutionizing traditional design processes and enhancing creative capabilities. By integrating machine learning algorithms, generative design techniques, and advanced data analytics, AI offers innovative solutions for optimizing spatial layouts, selecting color schemes, and personalizing interior aesthetics. This research delves into key applications such as virtual staging, smart home integrations, and AI-driven design assistants that enable designers to craft functional and aesthetically pleasing environments with greater efficiency. Furthermore, the study investigates the role of AI in sustainable design, highlighting its potential to minimize waste and promote eco-friendly materials. Through case studies and practical examples, the paper demonstrates the benefits and challenges of AI adoption in interior design, emphasizing the importance of maintaining a balance between technological advancements and human creativity. The findings suggest that while AI tools significantly enhance design accuracy and productivity, they also necessitate a redefinition of the designer's role in the creative process. This research contributes to the growing body of knowledge on AI in design, offering insights for practitioners and academics seeking to understand and leverage AI's potential in shaping the future of interior design.