Now-a-days, researchers are increasingly looking into new and innovative techniques with the help of information technology to overcome the rapid surge in healthcare costs facing the community. Research undertaken in the past has shown that artificial intelligence (AI) tools and techniques can aid in the diagnosis of disease states and assessment of treatment outcomes. This has been demonstrated in a number of areas, including: help with medical decision support system, classification of heart disease from electrocardiogram (ECG) waveforms, identification of epileptic seizure from electroencephalogram (EEG) signals, ophthalmology to detect glaucoma disease, abnormality in movement pattern (gait) recognition for rehabilitation and potential falls risk minimization, assisting functional electrical stimulation (FES) control in rehabilitation setting of spinal cord injured patients, and clustering of medical images (Begg et al., 2003; Garrett et al., 2003; Masulli et al., 1998; Papadourokis et al., 1998; Silva & Silva, 1998). Recent developments in information technology and AI tools, particularly in neural networks, fuzzy logic and support vector machines, have provided the necessary support to develop highly efficient automated diagnostic systems. Despite plenty of future challenges, these new advances in AI tools hold much promise for future developments in AI-based approaches in solving medical and health-related problems. This article is organized as follows: Following an overview of major AI techniques, a brief review of some of the applications of AI in healthcare is provided. Future challenges and directions in automated diagnostics are discussed in the summary and conclusion sections.