Smart cities continue to be discussed throughout Europe as a result of the continent’s rising urbanization and the need for sustainable development. Artificial intelligence (AI) has the potential to significantly promote this shift by assisting cities in becoming more effective, sustainable, and receptive to the requirements of their residents. The goal of this study is to examine the potential and difficulties of AI in urban development and present a framework for incorporating AI into city planning and management in European cities. This is done by analyzing case study examples from European cities and examining primary and secondary data sources, with the aim of providing a comprehensive framework for the sustainable integration of AI systems. This study presents a set of ethical and inclusive AI criteria, such as transparency, inclusion, and accountability, to enable responsible AI research and implementation. It continues by emphasizing the need for efficient AI integration in smart cities and pushing for a holistic AI-enabled transition to inclusive and sustainable smart cities.