The application of artificial intelligence (AI) and the improvement of environmental, social, and governance (ESG) performance have become important concerns for contemporary firms. Understanding whether AI can be effectively integrated into corporate ESG practices has significant implications for sustainable development. Using panel data from Chinese A-share listed firms from 2009 to 2025, this study empirically examines the effect of AI application on corporate ESG performance through a fixed-effects model. The results show that AI application significantly improves corporate ESG performance, indicating that firms with higher levels of AI adoption tend to achieve better ESG outcomes. The heterogeneity analysis further reveals that this effect varies according to firms’ technological intensity, industry pollution characteristics, and the strength of regional environmental regulation. Specifically, the positive effect of AI application is more pronounced among firms with lower technological intensity, firms operating in non-heavily polluting industries, and firms located in regions with stricter environmental regulation. The mediation analysis shows that AI application enhances ESG performance by promoting human capital upgrading and green technological innovation, thereby strengthening firms’ internal capabilities and technological foundations for sustainable development. This study contributes to the literature by integrating AI application and ESG-oriented sustainable development within a unified analytical framework.