Today, the spread of new technologies, especially artificial intelligence, has created extensive developments in the management and supervisory systems of organizations. Municipalities, as one of the most important urban service providers, need to utilize intelligent technologies to improve the quality of services, increase transparency, reduce administrative corruption, and improve supervisory processes. In the meantime, artificial intelligence, with capabilities such as extensive data analysis, identifying behavioral patterns, detecting violations, continuous performance monitoring, and intelligent decision-making, plays an effective role in the transformation of the inspection and performance evaluation system of municipalities. The purpose of this article is to examine the role of artificial intelligence in the transformation of the inspection and performance evaluation processes of municipalities and to explain the opportunities and challenges of using this technology in urban management. The present study is of a review-analytical type and the information required for it has been collected using library resources, scientific articles, domestic and foreign research, and related documents. The results of the studies showed that the use of artificial intelligence can increase the accuracy and speed of supervisory processes, reduce human errors, promote administrative transparency, improve organizational accountability, and prevent administrative violations in municipalities. Also, the use of smart systems, data-driven analysis, and electronic monitoring provides the basis for improving the efficiency of the performance evaluation system for municipal employees and managers. However, challenges such as limited technological infrastructure, legal and ethical issues, employee resistance to technological changes, and concerns about information security are considered to be the main obstacles to the development of artificial intelligence in municipalities. Finally, the development of digital infrastructure, training of human resources, the formulation of supporting laws, and the strengthening of smart urban management are considered to be the most important solutions for the effective use of artificial intelligence in the inspection and performance evaluation system of municipalities.