This study examines the effect of artificial intelligence (AI) adoption on customer loyalty in Islamic banking and tests the mediating role of digital marketing. A field study was conducted among 116 customers of Al Salam Bank Algeria. Using a descriptive–analytical design, data were collected through a questionnaire and analyzed with SPSS 22 and SmartPLS 4 using partial least squares structural equation modeling (PLS-SEM). The findings indicate that AI adoption has a positive and statistically significant effect on digital marketing and a positive direct effect on customer loyalty. Digital marketing also has a strong positive effect on customer loyalty and partially mediates the relationship between AI adoption and customer loyalty. The study recommends expanding the responsible use of AI applications, strengthening digital marketing strategies, and investing in digital transformation to improve customer experience and foster loyalty in Islamic banks.