Artificial Intelligence (AI) is making transformative strides in the mental health sector. This study explores the integration of AI into mental health services, focusing on current applications, ethical challenges, and future directions. By reviewing literature from databases such as PubMed, IEEE Xplore, PsycINFO, and Google Scholar, we examine the role of AI in diagnosis, treatment, and ongoing monitoring within mental healthcare. The findings reveal significant potential in AI-driven early diagnosis, personalized treatment plans, and AI-powered virtual support systems, all of which contribute to more accessible and effective mental health care. However, ethical considerations related to privacy, bias, and the need for human presence highlight the necessity for balanced AI integration. The study concludes that while AI has transformative potential, responsible use is critical to fully leverage its benefits in mental health services.