Some Neuron Mobility e-scooters already have the front-facing cameras and 1250 more will carry the technology by the end of this year.
E-scooters are not allowed on footpaths and Victoria Police described the practice as extremely dangerous during a crackdown in May.
The AI technology, called ScootSafe, can detect illegal behaviour in less than a second and issue a warning in real time, Neuron says.
The power on the e-scooters may also be reduced and repeat offenders banned from the service.
It's the first time an entire fleet will be decked out with the multi-million dollar technology in a major city anywhere in the world, the company claims.
It follows a six-month trial that trained the AI to recognise Melbourne's roads and footpaths.
Flinders Street, Elizabeth Street and the bottom end of Collins Street were identified as footpath-riding hotspots during the trial.
Some 55 per cent of all footpath riding was detected during the first or last minute of a trip, mainly because parking stations are located on footpaths.
Neuron says the AI technology allows it to be proactive about deterring footpath riding. (HANDOUT/NEURON MOBILITY)
The City of Melbourne backed a trial of an early version of the technology on Neuron and Lime scooters in August 2023.
Neuron Mobility Australia and New Zealand general manager Jayden Bryant said the AI technology should significantly drive down footpath riding in the city.
"The ability to provide real-time warnings and alerts at the exact moment a rider decides to enter the footpath can be a significant deterrent," Mr Bryant said.
"We are already using the data from our six-month trial to increase our enforcement activity at key times and locations and it has allowed us to be even more targeted with our rider education material so we can improve behaviour."
In May, Victoria Police said it was prioritising e-scooter enforcement over winter and banned almost 300 riders during a two-day crackdown, including 73 for riding on a footpath.
New Melbourne Lord Mayor Nicholas Reece has previously said the council needs to make e-scooters work better in the city.
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