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Due to the intelligence and efficiency of Artificial Intelligence, it is increasingly used by educators in assessment in all aspects. The purpose of the current systematic review is to comprehensively synthesize all available evidence in existing literature focusing on the application of AI in English language assessment within ESL/EFL settings. We analyzed 20 studies, identified future trends, evaluated current challenges, and offered implications of AI integration for educators, learners, and policymakers. Key findings highlight the effectiveness of AI-powered tools on learner’ English proficiency and their affective factors. However, challenges remain in providing higher-order feedback and ensuring test reliability. The review advocates the need for teacher professional development and suggests future research to improve AI-powered assessments’ reliability and validity.