We introduce live character conversational interactions in Intermediated Reality to bring real-world objects to life in Augmented Reality (AR) and Artificial Intelligence (AI). The AI recognizes live speech and generates short character responses, syncing the character’s facial expressions with speech audio. The Intermediated Reality AR warping technique allows for a high degree of realism in the animated facial expressions and movements reusing live video optical appearance direct from the device’s embedded camera. The proposed applications of Intermediated Reality with AI are exemplified through the captivating fusion of these technologies in toy interactive storytelling broadcasts and social telepresence scenarios. This innovative combination allows individuals to engage with AI characters in a natural and intuitive manner, creating new opportunities for social engagement and entertainment.