Artificial intelligence is revolutionizing virtual reality by making it smarter, more interactive, and personalized. This article explores how AI enhances VR through natural language processing, computer vision, and real-time behavioral adaptation. It discusses how AI-driven NPCs (non-playable characters) bring virtual worlds to life with realistic interactions and how machine learning algorithms optimize graphics rendering for smoother experiences. The piece also examines the role of AI in personalizing VR experiences, such as tailoring virtual environments based on user preferences and behavior. Ethical considerations, such as bias in AI algorithms and data privacy concerns, are also addressed. The article concludes with a vision of the future, where AI and VR converge to create fully autonomous, self-evolving virtual worlds that blur the line between reality and simulation.