Artificial intelligence is rapidly transforming the global education sector by offering innovative tools that enhance teaching, learning and assessment methods. These tools are not only changing the way educators deliver knowledge but also the way students interact and absorb information. Unfortunately, teaching, learning and assessment in tertiary institutions heavily rely on manual processes such as face-to-face instructions, paper-based assessments, inconsistent grading practices, backlogs of feedback, inequitable access to quality education, insufficient preparedness for the demands of a rapidly changing workforce, an overwhelming administrative load on lecturers and limited access to modern technology resources. On this note, this paper explores transformative power of artificial intelligence tools and in teaching, learning and assessment methods in Nigerian tertiary institutions. Through a critical analysis of existing literature, and expert insights, AI has transformative power in amplifying personalized learning, adaptive assessments, intelligent tutoring, automation of interactive activities, timely feedback, monitoring of students’ progress, assessment, prediction of future outcomes, collaboration and communication, translation of spoken content into multiple languages, identification of students at-risk, online assessment, virtual classroom sessions, connection of students with experts, sharing of learning resources, and gamification-based learning activities. In addition, data privacy and security concerns; digital divide and inequitable access; bias and fairness in AI Algorithms; transparency and accountability concerns; resistance to change and lack of expertise are ethical challenges of transformative power of AI tools. It is therefore recommended that Nigerian tertiary institutions must ensure compliance with data protection regulations such as the Nigeria Data Protection Regulation (NDPR). This can be achieved by investing in secure AI platforms, conducting regular audits, and providing training for staff and students on data privacy issues.