Introduction: Skin cancer is one of the most prevalent forms worldwide, with a significant increase in recent decades. Real-time and accurate detection can reduce the burdens of invasive treatments. The advent of Artificial Intelligence (AI) and Machine learning (ML) has introduced multiple tools to aid accurate and early detection, categorizing dermatological images and proving especially valuable in regions with a shortage of specialists. However, the adoption of these AI-based tools requires consideration of efficacy, safety, and ethical implications. Objective: The systematic review aims to evaluate existing research on the detection, categorization, and assessment of skin cancer images. Methods: The systematic literature review is conducted based on studies published from 2018 to 2023 in PubMed, Scopus, Embase, Web of Science, IEEE Xplore, ACM DL, and Ovid MEDLINE. Study selection, data extraction, and inclusion are carried out after a proper evaluation of the studies. Results are presented in tables and figures using a narrative synthesis. Results: The search identified 687 studies from the database. However, after three phases of identification, screening, and evaluation, only 16 studies were chosen, focusing on developing and validating AI tools to detect, diagnose, and categorize skin cancer. This systematic review covers the selected studies in multiple dimensions. Conclusion: The use of AI and ML in dermatology has revolutionized the early detection of cancer, but it is necessary to validate and collaborate with healthcare professionals to ensure efficacy, safety, and effectiveness.