In a recent survey, medical students expressed eagerness to acquire competencies in the use of artificial intelligence (AI) in medicine. It is time that undergraduate medical education takes the lead in helping students develop these competencies. We propose a solution that integrates competency-driven AI instruction in medical school curriculum. We applied constructivist and backwards design principles to design online learning assignments simulating the real-world work done in the healthcare industry. Our innovative approach assumed no technical background for students, yet addressed the need for training clinicians to be ready to practice in the new digital patient care environment. This modular 4-week AI course was implemented in 2019, integrating AI with evidence-based medicine, pathology, pharmacology, tele-monitoring, quality improvement, value-based care, and patient safety. This educational innovation was tested in 2 cohorts of fourth year medical students who demonstrated an improvement in knowledge with an average quiz score of 97% and in skills with an average application assignment score of 89%. Weekly reflections revealed how students learned to transition from theory to practice of AI and how these concepts might apply to their upcoming residency training programs and future medical practice. We present an innovative product that achieves the objective of competency-based education of students regarding the role of AI in medicine. This course can be integrated in the preclinical years with a focus on foundational knowledge, vocabulary, and concepts, and in clinical years with a focus on application of core knowledge to real-world scenarios.