The primary purpose of this study was to examine the extent to which the use of Artificial Intelligence (AI) tools during Performance-Based Assessment (PBA) task execution influences innovation skill development among Information and Communication Technology (ICT) diploma trainees in six public technical institutions in Kenya. A correlational research design was employed for the study. Stratified sampling and random sampling were used to sample 339 trainees from a target population of 2247 ICT diploma trainees in the 2024/2025 academic year. Data on study variables was collected using the ICT Diploma Trainee Questionnaire (IDTQ). The questionnaire’s construct validity was determined through factor analysis, while reliability was ascertained through the Cronbach's alpha coefficient for internal consistency. Frequencies, means, percentages and hierarchical multiple linear regression were used to analyse the collected data. The regression model obtained revealed that the use of AI tools in PBA task execution positively and significantly predicted trainees’ innovation skill development. The study therefore concluded that the use of AI tools in PBA task execution significantly influences innovation skill development among ICT diploma trainees. Hence, the study recommends that ICT diploma trainees integrate AI tools during PBA task execution and that trainers’ capacity in AI-supported PBA execution be enhanced