The development and applications of AI are critical for health sector in Ethiopia. Ethiopia’s adoption of national AI policy is a significant step towards harnessing AI for the well-being of its citizens. Given the benefits and risks of AI applications, Ethiopia’s AI policy should be implemented in a manner that maximizes the benefits and minimizes the ethical and legal risks. Implementation of the national and continental AI policies should facilitate ethical and lawful use/integration of indigenous knowledge of diagnostic and therapeutic practices. Ethiopia’s national health policy should be updated in line with its AI policy and global health initiatives. Appropriate legal reforms should be made to address the concerns and foster innovation in AI technologies.