This study investigates the application of Artificial Intelligence (AI) in fraud prevention and detection within public sector institutions in South-South Nigeria, grounded in theories from computer science, information systems, and organizational management. Key theories include information processing theory, bounded rationality, organizational learning, and the fraud triangle theory. A mixed-methods approach, combining qualitative and quantitative research methods, was employed to provide a comprehensive analysis. The study focused on public sector employees, auditors, fraud investigators, and IT professionals across six states: Rivers, Bayelsa, Delta, Akwa Ibom, Cross River, and Edo. A sample size of 300 respondents was determined using Krejcie and Morgan's table for sampling. Data collection involved structured questionnaires to gather quantitative data on AI awareness and its perceived effectiveness in fraud prevention and detection, and semi-structured interviews with key informants to gain qualitative insights. Descriptive and inferential statistics were used to analyze the data, including frequency distributions, mean, standard deviation, and regression analysis using SPSS. The regression analysis revealed that Data Analytics, Machine Learning, and Natural Language Processing significantly impact internal control and auditing, as well as whistleblower programs. Data Analytics showed the strongest positive relationship with internal control and auditing (B = 0.40, p < 0.001), followed by Machine Learning (B = 0.35, p = 0.004), and Natural Language Processing (B = 0.25, p = 0.024). For whistleblower programs, Machine Learning had the most substantial impact (B = 0.40, p = 0.008), followed by Data Analytics (B = 0.30, p = 0.036). The findings underscore the critical role of AI technologies in enhancing fraud prevention and detection mechanisms in the public sector. Recommendations include prioritizing AI integration, investing in data analytics, developing machine learning models, exploring NLP applications, and implementing comprehensive AI training programs.