Advancements in digital technologies, such as the Internet of Things (IoT), fog/edge/cloud computing, and cyber‐physical systems have revolutionized a broad spectrum of smart city applications. The significant contributions and rapid developments of advanced artificial intelligence‐based technologies and approaches, like, machine learning and deep learning, which are applied for extracting accurate information from extensive data, perform a potential role in IoT applications. Moreover, blockchain technology's fast adoption also contributes a significant role in the development of the new digital smart city ecosystem. Thus, artificial intelligence and blockchain technology convergence revolutionize smart city infrastructures to establish sustainable ecosystems for IoT applications. Nevertheless, these advancements and technological improvements also provide both opportunities and challenges for developing sustainable IoT applications. This paper aims to examine the convergence of blockchain technology and artificial intelligence, a unique driver towards technological transformation in intelligent and sustainable IoT applications. We mainly discussed the advantages of blockchain technology that might promote the advancement and development of sustainable IoT applications. On the basis of the discussion, we introduced a smart and sustainable conceptual framework that leverages cloud computing, IoT devices, and artificial intelligence to process and obtain necessary information. The system provides digital analytics and saves results in decentralized cloud repositories through blockchain technology to promote various applications. Moreover, the layer‐based architecture allows a sustainable incentive structure, which can possibly assist secure and protected smart city applications. We reviewed the enhanced solutions, summing up the key points that can be applied for generating various artificial intelligence and blockchain‐based systems. Also, we discussed the issues that still remain open and our future research goals; that can introduce new ideas and future guidelines for sustainable IoT applications.