The rise of artificial intelligence (AI) is transforming how firms innovate and compete, giving birth to AI-powered business ecosystems that span multiple organizations. This paper reviews highly cited research from the last five years on AI in business ecosystems through the lens of dynamic capabilities. Dynamic capabilities are a firm’s ability to integrate, build, and reconfigure competencies in rapidly changing environments. They also provide a valuable perspective for understanding how organizations sense and seize AI opportunities and reconfigure their resources in ecosystem contexts. Key findings from recent studies were synthesized, highlighting that AI can amplify value creation through data-driven learning and network effects while introducing new value capture and governance challenges. Empirical evidence shows that leading firms leverage dynamic capabilities to orchestrate ecosystems and co-create value with partners and that an optimal level of AI utilization is needed for sustainable ecosystem performance. The paper will then discuss how companies develop new sensing, seizing, and transforming capabilities to drive AI-based business model innovation. The paper concludes with implications for theory and practice, suggesting that firms must strategically develop AI-related dynamic capabilities to thrive in increasingly AI-centric, inter-organizational business environments.