Educational technology companies leverage the benefits of AI to provide quality education online. AI connects educationists and beneficiaries across the globe 24x7. It cannot replace teachers; but some processes can be replaced by its tools and techniques. AI applications in education cover training, content mapping, pedagogy, communications, assessment, administration and resource management. It monitors students’ attendance & feelings, appraises their progress and suggests personalised learning models. AI identifies student’s level & interest, provides relevant course work & value addition and places them in track. It identifies root causes of problems in pedagogy and drives more consistent outcomes. AI provides feedback to teachers and suggests improvements for effective teaching-learning process. Students with disabilities can have access to comfortable learning. It reduces teachers’ burden; hence they can concentrate on pedagogical development and improving themselves. Anyhow, accessibility of resources, cost of implementation & maintenance, resistance to change, technical glitches and cyber threats are some of the challenges. AI has power to transform education and provide new environment of learning. This chapter explores the applications & benefits of AI in education with a note in pandemic period, discusses the AI tools in pedagogical development, challenges in implementing AI in education and offers suggestions to overcome them.