Recent advancements in artificial intelligence (AI) have profoundly transformed weather forecasting, challenging traditional reliance on numerical weather prediction (NWP) models. Despite notable progress, AI models still depend heavily on traditional NWP systems and data assimilation methods to generate analysis fields, a dependency that increases computational demands and might limit forecast accuracy. This study explored the integration of Gridpoint Statistical Interpolation (GSI) with the Pangu-Weather AI forecasting model (GSI-Pangu), and assessed the potential for AI models to autonomously generate forecasts by leveraging mature data assimilation systems. Our experiments commenced by adopting ERA5 reanalysis data for the initial cycle, and then involved assimilation of simulated observations in subsequent cycles, spanning a month-long period. Results demonstrated notable enhancements in forecast accuracy, with reductions in the root mean square error across various atmospheric variables compared with the results of a control experiment without data assimilation. Additionally, the results highlighted GSI-Pangu’s ability to predict large-scale circulation patterns of extreme precipitation events, together with its effectiveness in driving regional models to accurately forecast precipitation intensity and distribution. Successful implementation of GSI within the Pangu-Weather framework underscores the transformative potential of hybrid forecasting systems, which merge conventional meteorological techniques with AI innovations, thereby facilitating accelerated adoption of AI in weather forecasting.