Early detection of sleep apnea, the health condition where airflow either ceases or decreases episodically during sleep, is crucial to initiate timely interventions and avoid complications. Wearable artificial intelligence (AI), the integration of AI algorithms into wearable devices to collect and analyze data to offer various functionalities and insights, can efficiently detect sleep apnea due to its convenience, accessibility, affordability, objectivity, and real-time monitoring capabilities, thereby addressing the limitations of traditional approaches such as polysomnography. The objective of this systematic review was to examine the effectiveness of wearable AI in detecting sleep apnea, its type, and its severity. Our search was conducted in 6 electronic databases. This review included English research articles evaluating wearable AI's performance in identifying sleep apnea, distinguishing its type, and gauging its severity. Two researchers independently conducted study selection, extracted data, and assessed the risk of bias using an adapted Quality Assessment of Studies of Diagnostic Accuracy-Revised tool. We used both narrative and statistical techniques for evidence synthesis. Among 615 studies, 38 (6.2%) met the eligibility criteria for this review. The pooled mean accuracy, sensitivity, and specificity of wearable AI in detecting apnea events in respiration (apnea and nonapnea events) were 0.893, 0.793, and 0.947, respectively. The pooled mean accuracy of wearable AI in differentiating types of apnea events in respiration (normal, obstructive sleep apnea, central sleep apnea, mixed apnea, and hypopnea) was 0.815. The pooled mean accuracy, sensitivity, and specificity of wearable AI in detecting sleep apnea were 0.869, 0.938, and 0.752, respectively. The pooled mean accuracy of wearable AI in identifying the severity level of sleep apnea (normal, mild, moderate, and severe) and estimating the severity score (Apnea-Hypopnea Index) was 0.651 and 0.877, respectively. Subgroup analyses found different moderators of wearable AI performance for different outcomes, such as the type of algorithm, type of data, type of sleep apnea, and placement of wearable devices. Wearable AI shows potential in identifying and classifying sleep apnea, but its current performance is suboptimal for routine clinical use. We recommend concurrent use with traditional assessments until improved evidence supports its reliability. Certified commercial wearables are needed for effectively detecting sleep apnea, predicting its occurrence, and delivering proactive interventions. Researchers should conduct further studies on detecting central sleep apnea, prioritize deep learning algorithms, incorporate self-reported and nonwearable data, evaluate performance across different device placements, and provide detailed findings for effective meta-analyses.