Although the role of motivational leadership styles in fostering innovative work behavior has received considerable attention in the leadership and innovation literature, it remains insufficiently clear how employees’ perceptions of artificial intelligence (AI) may strengthen or weaken the effects of such leadership styles on innovative work behavior. This uncertainty is particularly salient in service organizations, which simultaneously face human-centered requirements and rising expectations associated with digital transformation. Addressing this gap, the present study examines the effect of Pygmalion leadership on innovative work behavior and clarifies the moderating role of employees’ perceptions of AI. Data were collected from a sample of 220 employees of the Imam Khomeini Relief Committee in Kurdistan Province (N = 328) and analyzed using partial least squares structural equation modeling (PLS-SEM). The results indicate that Pygmalion leadership has a positive and significant effect on innovative work behavior, and that more positive employee perceptions of AI amplify this relationship. In addition, significant differences in the mean levels of the study variables were observed across certain demographic characteristics. Theoretically, the findings contribute to the development of the “Human–Technology–Organization” framework by showing that motivational leadership mechanisms are more effective when employees perceive AI as an opportunity to improve work processes and enhance problem solving. Practically, strengthening employees’ perceptions of AI through clarifying its functions, providing training, and managing concerns may help promote innovation in service organizations.