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The integration of artificial intelligence (AI) into healthcare systems has revolutionized clinical analytics, enabling enhanced diagnostic accuracy, predictive modeling, and personalized treatment pathways. However, the opacity of many AI models poses significant challenges to their clinical adoption, necessitating advancements in explainable AI (XAI) to ensure interpretability and transparency. This narrative review synthesizes the literature on XAI within clinical systems, focusing on interpretability mechanisms, transparency frameworks, and deployment constraints in healthcare analytics. Drawing from high-impact studies, we examine how XAI addresses the “black box” nature of machine learning models in high-stakes medical decisions, particularly in contexts where performance has traditionally been prioritized over explainability. Key themes include the shift toward inherently interpretable models for critical applications, such as diagnostic imaging and predictive analytics, where post-hoc explanations often fall short. We explore the ethical imperatives for responsible AI deployment, including strategies for mitigating harm through transparent systems that align with clinical workflows. The review integrates perspectives on XAI in clinical diagnostics, emphasizing challenges in balancing model complexity with user trust. Transparency is framed not merely as a technical feature but as a systemic requirement, incorporating structured reporting practices for AI interventions and standardized modeling approaches. Deployment constraints are analyzed through the lens of real-world integration, including regulatory considerations, data privacy concerns, and human–AI interaction dynamics in healthcare infrastructures. We synthesize evidence from diverse applications, such as lung cancer diagnosis via explainable models and radiographic assessments, underscoring the need for multidisciplinary approaches to XAI. Furthermore, the review highlights biases in AI systems, particularly sex and gender disparities, and advocates for inclusive analytics to foster equitable healthcare. Clinical applications beyond the black box are discussed, with calls for standardized reporting to enhance reproducibility and trust. We position XAI as essential for closed-loop systems that incorporate feedback mechanisms, ensuring ongoing model recalibration in dynamic clinical environments. The synthesis reveals persistent gaps in current XAI deployments, such as overreliance on surrogate explanations that may mislead clinicians. Ultimately, this review proposes a systems-level framework for XAI in healthcare, integrating data ingestion, inference, decision support, and governance loops to overcome transparency barriers. This comprehensive overview informs the development of future AI-enabled healthcare infrastructures, emphasizing interpretability as a cornerstone for safe and effective clinical analytics.