Having an engaged workforce is the most crucial challenge for business leaders. Leaders who get it right are the most innovative, forward-thinking, and driven to succeed in today’s evolving business landscape. Leaders across sectors are increasingly switching to technology to address various employee engagement challenges. Artificial intelligence (AI) presents groundbreaking solutions to enhance employee engagement. Leaders have realized that leveraging AI tools and processes has become crucial for organizations to gain competitive advantage and build a employee favourable work environment. AI-powered tools can analyze large quantities of data to provide customized experiences thereby enhancing employees’ sense of being valued. AI technologies, including machine learning, natural language processing, and data analytics, provide the business leaders the much-needed tools to understand the sentiments and behaviors of their employees. By examining massive data from employee surveys, social media interactions, and performance metrics, AI can identify employee engagement trends and sentiment shifts in real time. Engaging employees in an AI-driven environment is crucial to harnessing the full potential of these technologies. However, integrating AI tools and processes in the work environment comes with its own set of challenges. There are increasing concerns of cyber security, data privacy, algorithmic bias, ethical compromise, and the prospective of dehumanization of employee interactions. Following a systematic review approach, the present study aims to highlight the key applications of AI for engaging employees, as well as the critical leadership challenges in employee engagement that may arise due to AI implementation. This study adopts a quantitative research approach to examine the relationship among organizational culture, AI applications, leadership and employee engagement. The study shall be applicable to all types of business organizations across sectors. Based on existing literature and discussions with AI experts, the present study will attempt to provide suggestions and recommendations that can help leaders build synergy between human capital of an organization and AI implementation.