This study investigates the influence of Artificial Intelligence (AI) capabilities on Sustainable Supply Chain Performance (SSCP) through the mediating role of Supply Chain Competitive Advantage (SCCA). The study adopts a quantitative research method to examine the effect of AI’s ability to analyze and consider adaptive considerations in supply chain competitiveness and sustainability. The sampling technique was purposive and included 63 organizations, with data collected by survey mainly from Indonesia’s manufacturing and service sectors. The results reveal that the AI-Analysis Capability (AI-AC) is a significant antecedent for SCCA. In contrast to what was hypothesized, it does not directly influence SSCP. AI-Adaptation Capability (AI-AdC) significantly impacts SCCA directly. The results imply that the effect of AI capabilities on SSCP entirely passes through SCCA. Integrating AI into supply chains will improve long-term efficiency and transparency, as well as overall sustainability and prosocial goals. However, key obstacles remain, including data privacy, ethical concerns, and standard sustainability metrics. The findings highlight the need for an end-to-end AI deployment framework focusing on governance, stakeholder collaboration, and real-time decision-making tools to enhance supply chain resilience and sustainability. These insights present a roadmap for how to magnify AI-fueled competitive edges in the service of long-term supply chain sustainability. © 2025 IEEE.