As Artificial Intelligence (AI) becomes increasingly embedded in daily life, its influence on the psychological and social development of digital natives; those who have grown up in a world saturated with technology, demands careful examination. Digital natives are uniquely positioned in a rapidly evolving technological landscape, where AI plays a pivotal role in education, entertainment, communication, and more. This study investigates how early and continuous exposure to AI shapes cognitive development, mental health, and identity formation. It considers both the potential benefits, such as enhanced learning opportunities and personalized content, and the challenges, including dependence on technology, reduced face-to-face interactions, and the potential for altered self-perception due to AI’s influence. A key focus of the research is the impact of AI on social behaviors and relationships. As AI-driven platforms increasingly mediate interactions, this study examines how these technologies affect the ability of digital natives to build and maintain meaningful social connections. Additionally, there is a psychological effects of growing up in an AI-pervasive environment. This includes but not limited to the influences of AI on emotional regulation, stress levels, and overall well-being, particularly as digital natives transition from adolescence to adulthood.