The rising global concern about environmental sustainability drives an escalating need for sustainable packaging solutions in the packaging industry. The integration of artificial intelligence (AI) into green innovation for packaging represents a transformative approach to addressing both environmental and operational challenges. A systematic literature review (SLR) based on PRISMA 2020 framework examines recent AI-powered green packaging innovation patterns and technologies along with barriers and forecasts future developments. The analytical research included 48 peer-reviewed articles that appeared between 2020 and the present year. The findings reveal that six primary types of AI technologies are applied in packaging, with Machine Learning, general AI applications, and Deep Learning being most frequently utilized. Green packaging innovations centre around biodegradable materials and smart packaging, supported by five major AI-driven applications: process optimization, packaging monitoring, fraud detection, computer vision, and natural language processing. Despite these advancements, widespread adoption is hindered by high implementation costs, technical complexity, and regulatory uncertainties. Moreover, emerging trends highlight the importance of scalable solutions, advanced AI model development, circular economy alignment, and cross-sector collaboration. This review provides a structured knowledge base that aids academics, business leaders, and policymakers in understanding AI’s role in sustainable packaging. It also offers strategic insights and research directions to accelerate the transition toward eco-efficient and intelligent packaging systems.