PurposeThis study aims to explore AI’s potential impact on the broader landscape of higher education in Tanzania. This study contributes to the ongoing discussion of AI’s potential to transform higher education and highlights the ethical considerations and challenges that must be addressed to ensure its successful implementation. This study informs future research and policy decisions in education and technology by providing a detailed understanding of AI’s perceived benefits and challenges in higher education.Design/methodology/approachA mixed-methods approach was used, which involves collecting and analyzing quantitative and qualitative data to understand the research problem comprehensively. This approach allowed data triangulation and led to a more robust and detailed understanding of this study.FindingsIn this study, it was discovered that enhanced assessment, time-saving, personalized learning, improved accessibility and detecting cheating are the perceived benefits of AI as a tool for enhancing learning in higher education, while cost and infrastructure, academic misconduct, data privacy and security, bias and ethical concerns and lack of human interaction are the perceived challenges of AI as a tool for enhancing learning in higher education. Further, it was revealed that students are more accepting of using AI tools in the classroom because they think they are more effective and engaging. On the other hand, faculty were more cautious and skeptical about employing AI tools in the classroom because they worried about how it would affect their teaching methods and job security.Research limitations/implicationsThe data collection was not conducted face-to-face. To fully capture respondents’ emotional responses, feelings, facial expressions, reactions, or body language was challenging. However, a sufficient number of individuals who participated were very cooperative, and their knowledge was very beneficial in understanding the topic.Originality/valueA unique view of this study is a clear understanding of the perceived benefits and challenges of using AI as a tool for enhancing learning in higher education, as well as the variations in these perceptions among students and faculty. By examining the perspectives of both groups, this study provides a comprehensive understanding of the complex role of AI in higher education. Understanding the broader implications of AI in higher education can inform policy decisions and ensure that AI is used responsibly and ethically.