The increasing complexity of modern power systems, driven by the integration of renewable energy sources and growing electricity demand, has led to a need for optimizing smart grids. Traditional grid management approaches are often insufficient in addressing the challenges of efficiency, reliability, and minimizing losses. In this paper, we propose a novel AI-based optimization framework for smart grids, designed to reduce transmission and distribution losses, enhance system efficiency, and improve grid reliability. We conduct a comparative analysis of traditional optimization techniques and state-of-the-art AI algorithms and demonstrate the superiority of the proposed method using the IEEE 33-bus benchmark system. Results show a significant reduction in power losses and an improvement in voltage profile, leading to a more efficient and reliable grid.