This paper examines the awareness of artificial intelligence (AI) among school teachers in Nepal. We interviewed twenty teachers from ten urban schools in Nepal over four weeks using a semi-structured interview tool. The analysis of interview data reveals the teachers’ mixed perception of AI, including their understanding of innovative technologies in education, the potential challenges for new-generation teachers, and the opportunities for pedagogical transformations. The findings suggest that although the teachers have limited awareness of how AI can be used in teaching and learning, they possess some level of understanding that has opened up new opportunities for exploring innovative ways of teaching and learning. Notably, participants discussed tools, such as Education Management Information System (EMIS) for record keeping and automated grading and AI-driven chatbots for student tutoring. However, teachers also expressed concerns about the possibility of AI replacing human teachers. These insights provide valuable implications for policymakers and educators regarding the integration of AI into classroom instructions to promote innovative and equitable learning opportunities.