Introducing Artificial Intelligence (AI) into education presents key opportunities for enhancing teachers' competence-based knowledge, skills, and effectiveness. This study explored the level of AI tools usage by teachers in their classroom instruction, in assessment practices, and the development of teacher competence, in senior secondary schools in the FCT, Abuja. Guided by the Technology Acceptance Model (TAM) and Constructivist Theory, a mixed-methods descriptive survey design was adopted for the study. The target population was 3,420 teachers in the public senior secondary schools in the FCT, Abuja. A sample size of 280 teachers was randomly selected through stratified random sampling technique ensuring representation from six Area Councils, and 12 teachers were purposively sampled for semi-structured interviews. Data were collected through a 35-item questionnaire titled Questionnaire on Artificial Intelligence and Teacher Capacity (QAITC), validated through expert judgment and a reliability coefficient of 0.87, and a semi-structured interview guide. Quantitative data were analysed using frequency counts, simple percentages, means, standard deviations, and Pearson Product-Moment Correlation, while qualitative data were thematically analysed. Response rate on the returned questionnaires was 94.3% (264 out of 280 questionnaires returned). The study found moderate use of AI tools by the teachers, especially for lesson planning and the preparation of instructional resources. Conversely, the use of AI tools for automated grading and students' performance analysis was very low. The result also revealed a significant positive relationship between teachers use of AI tools and their teaching competence (r = 0.61 p < 0.001). Poor digital infrastructure, limited access to AI tools training, and soaring cost of internet data and digital devices were identified as main challenges to effective use of AI by teachers. The study found that frequent in-service training for teachers, integration of AI tools into the curriculum, improvement of digital infrastructure, as well as government funding and policy formulation would help to enhance teachers' capacity to effectively use AI tools in their classroom instruction. The study concludes that, through effective integration of AI tools, regular teacher professional development, as well as availability of physical and financial resources, education system in Nigeria can use AI tools to improve instruction..