Smart healthcare systems incorporating the metaverse and artificial intelligence (AI) present previously unheard-of possibilities for revolutionizing patient care and service provision. To guarantee these solutions’ reliability and moral use, this convergence of developing technologies brings up important security and privacy issues. The security and privacy issues of AI-powered metaverse applications in the healthcare industry are examined in this chapter. It explores the data privacy issues in virtual healthcare settings, where private and sensitive patient data are generated and shared more often across networked digital platforms. The chapter examines the best practices and ethical standards for creating and implementing metaverse health apps. To protect patient privacy and respect medical ethics, it covers data protection, user consent, transparency, and the ethical use of AI algorithms. The chapter also evaluates and reduces the security and privacy issues associated with AI-powered metaverse healthcare solutions. This framework offers a comprehensive approach to guaranteeing the confidentiality, integrity, and accessibility of sensitive healthcare data in virtual environments by incorporating technical, organizational, and regulatory elements. This chapter prioritizes patient data protection and the ethical development of cutting-edge digital healthcare services while addressing these crucial security and privacy concerns. It also aims to equip healthcare organizations, policymakers, and technology providers with the knowledge and tools they need to navigate the complex world of AI-infused metaverse solutions.