The twenty-first century is the century of digital transformation in many aspects of educational, industrial, economic, social, health, and other aspects of life. These aspects of life were traditionally practiced until the fifties of the twentieth century. After the invention of computers and the development of electronic applications, then the development jumped dramatically by using artificial intelligence. All these rapid changes brought qualitative, quantitative, and technical shifts to trading in applied arts. Workers specialized in those fields face various challenges related to entrepreneurship and digital transformation. This paper aims to discuss the following: 1) defining applied arts and the factors which are affecting and getting affected by them, 2) reviewing the most critical challenges facing the flourishment of applied arts as essential elements in the creative industries, 3) dealing with applied arts as vital and promising fields in entrepreneurship, 4) Review the most important effects of digital transformation on entrepreneurship in applied arts. The importance of this paper stems from the close connections between applied arts with entrepreneurship and digital transformation on the one hand, and the challenges and opportunities available for investments in them. In writing this paper, inductive and analytical approaches were used to analyze what was written in relevant references. This paper is concluded with sixteen important recommendations, which are summarized in the need for business leaders to pay attention to following up on everything new in the field of digitization, that serves their precise specializations, helps them innovate, and fully meets customer needs.