The use of artificial intelligence and interactive technologies has altered the very nature of the performing arts, introducing new approaches to performance-making, audience participation, and collaboration. This paper analyses AI-based processes’ uses, advantages, and disadvantages in modern performance environments. We investigate how AI can enhance music, movement, playwriting, and stage and multimedia performances by extending the generative models, machine learning systems, and real-time interactive platforms. Various forms of engaging users in the co-production process, from input-output systems and generative tools to participatory interfaces, are discussed in the context of their computational structures and aesthetics. The review also highlights the new creative possibilities that AI opens up, its inclusiveness, and the latest types of artworks produced in collaboration with machines. At the same time, we discuss topical ethical issues regarding authorship, algorithmic bias, the agency of art, and technical platforms. Lastly, we discuss the prospects for the future comprised of advances in adaptive learning, interdisciplinary studies, and the guidelines for ethical uses of AI. This review, therefore, intertwines theories from arts, technology, and cultural studies to enhance the understanding of how AI is reshaping the epistemologies and practices of the performing arts in the digital age.