Detecting faulty pipelines in water management systems is crucial for ensuring a reliable supply of clean water. Traditional inspection methods are often time-consuming, costly, and prone to errors. This study introduces an AI-based model utilizing images to detect pipeline defects, focusing on leaks, cracks, and corrosion. The YOLOv8 model is employed for object detection due to its exceptional performance in detecting objects, segmentation, pose estimation, tracking, and classification. By training on a large dataset of labeled images, the model effectively learns to identify visual patterns associated with pipeline faults. Experiments conducted on a real-world dataset demonstrate that the AI-based model significantly outperforms traditional methods in detection accuracy. The model also exhibits robustness to various environmental conditions such as lighting changes, camera angles, and occlusions, ensuring reliable performance in diverse scenarios. The efficient processing time of the model enables real-time fault detection in large-scale water distribution networks implementing this AI-based model offers numerous advantages for water management systems. It reduces dependence on manual inspections, thereby saving costs and enhancing operational efficiency. Additionally, the model facilitates proactive maintenance through the early detection of faults, preventing water loss, contamination, and infrastructure damage. The results from the three conducted experiments indicate that the model from Experiment 1 achieves a commendable mAP50 of 90% in detecting faulty pipes, with an overall mAP50 of 74.7%. In contrast, the model from Experiment 3 exhibits superior overall performance, achieving a mAP50 of 76.1%. This research presents a promising approach to improving the reliability and sustainability of water management systems through AI-based fault detection using image analysis.