The paper investigates the synergy between AI and IoT in revolutionizing public transit systems, emphasizing their role in addressing existing challenges and improving overall efficiency. It explores the application of IoT devices in creating a smart infrastructure that enables real-time data collection, monitoring, and management of transit operations. The research delves into the realm of predictive maintenance, showcasing how AI algorithms, powered by IoT data, can anticipate potential issues in transit vehicles. By analyzing sensor data, transit authorities can proactively address maintenance needs, minimizing downtime, reducing repair costs, and ensuring a more reliable and sustainable public transit service. Route optimization emerges as another crucial aspect of the study, highlighting how AI algorithms leverage historical and real-time data to recommend the most efficient transit routes. Factors such as traffic patterns, weather conditions, and passenger demand are considered to enhance overall system efficiency and reduce travel time for passengers. The paper introduces the concept of dynamic scheduling, illustrating how AI-driven algorithms adapt transit schedules in real-time based on changing passenger needs and external factors. This dynamic approach aims to provide more responsive services, ultimately reducing wait times and improving overall user satisfaction. Passenger information systems are explored as a pivotal component, illustrating how AI and IoT technologies enhance the passenger experience. Real-time communication through mobile apps, digital displays, and other channels ensures that passengers have accurate and timely information about arrival times, delays, and alternative routes, empowering them to make informed decisions. The researchers also delve into fare optimization, examining how AI algorithms analyze data on passenger demographics, travel patterns, and economic factors to create fair and affordable fare structures. This approach aims to encourage ridership, increase revenue, and improve the financial sustainability of public transit systems. The abstract presents a comprehensive overview of how the integration of AI and IoT technologies in public transit systems transforms urban mobility. The findings suggest that leveraging real-time data, predictive analytics, and dynamic solutions can significantly enhance the reliability, accessibility, and sustainability of public transit. As cities continue to explore innovative solutions, the abstract serves as a roadmap for developing smarter, user-friendly, and efficient urban transportation networks, ultimately contributing to improved quality of life for residents.