After the .com boom, the next big thing in the 21st century is the “Internet of Things”. The “Internet of Things” is exploding and infusing intelligence globally. From infinitesimal chips to mammoth machineries, billions of smart gadgets communicate with each other with the aid of wireless devices. The day is not far when every physical item will no longer remain disconnected from the virtual world. Presently, your coffee kettle starts automatically when you wake up in the morning and lights go off when you leave home for your office where all devices are controlled/activated through your voice. Dream becomes reality, when the whole world will be running automatically and virtually with the initiation of a command. Connecting „Internet of Things‟ with „Artificial Intelligence‟, high -tech and scientific technologies will transform the world into a completely digital world. These two powerful pillars will build super -intelligent e -devices that are ready for new challenges. It will be made possible by evolving IP strategies, Radio Frequency Identification (RFID), embedded sensors, actuators that are intelli gently connected in machines and other physical objects. This paper aims to provide an insight into how the third wave of information technology i.e. Internet of Things (IoT) will interconnect the physical world using artificial intelligence. The paper wil l further discuss the building blocks of the IoT and the perspective areas where it can be implemented smartly.