This paper explores the transformative role of Artificial Intelligence (AI) in enhancing resource allocation efficiency within educational institutions in Nigeria. As the education sector faces mounting challenges such as limited budgets, increasing enrolment, and the demand for quality education, the integration of AI-driven systems presents a viable solution for data-driven decision-making. AI applications, including predictive analytics and machine learning, offer tools for optimizing financial, human, and material resources, ensuring transparency, accountability, and equitable distribution. The study highlights that while traditional allocation methods are often inefficient and prone to bias, AI can improve institutional performance through automation and intelligent forecasting. Nevertheless, the paper identifies challenges such as data integrity, infrastructural deficits, and ethical concerns that must be addressed to fully harness AI’s potential. It concludes that successful AI implementation requires adequate policy frameworks, capacity building, and digital infrastructure investment to achieve sustainable and inclusive educational outcomes aligned with Sustainable Development Goal 4.