Anderson, who rose to fame with her eight-minute song O Superman in 1981, said she has embraced AI in her work, but also acknowledges its danger in society.
"As a tool, I love it," she told BBC Radio 4's Desert Island Discs.
"I also recognise that it's the end of the world kind of thing, it's horrible. You can impersonate anyone.
"You could win an election with something like this. You could start a war with something like this.
"We depend on a certain amount of authenticity that gets stamped, but we don't know who's saying what anymore at all.
"It is dismantling our world."
The 77-year-old said she is currently working with a group in Toronto using AI to create imagery out of spoken language - "so as you say something, it appears as an array of visuals".
"It's frightening," she said. "It's like having somebody invade your dreams, or be able to see what you're thinking or dreaming. It's wild."
Last year, Anderson revealed she was "addicted" to using an AI text generator to emulate the words of her late husband, Lou Reed, who co-founded US rock band The Velvet Underground.
Reed died in 2013.
Laurie Anderson says she uses AI to emulate the words of her late husband Lou Reed, as she grieves. (Tracey Nearmy/AAP PHOTOS)
Anderson told Desert Island Discs host Lauren Laverne how her Buddhist beliefs helped her grieve, following its teachings which included the instruction not to cry.
"That is the number one rule, no crying, zero crying," she said.
"It was exhilarating... It's also a great honour and privilege to feel all those things and to try to understand them. I mean, it's awesome."
Anderson also spoke about the responsibility she felt inheriting Reed's archive.
"It was like a 15-storey building falls on you because you suddenly have to take care of all of those things and I wasn't prepared for that really, we'd never really talked about anything," she said.
"We did talk about having something called the L&L art ranch, and that was going to be when we were really old and no one wanted to come and hear us anymore, we were going to have a kind of bar where he could play every night, and we just do whatever we wanted and that was the plan.
"But the plan wasn't for him to die and then I would just have to do what?"
Anderson is a recipient of both a Grammy lifetime achievement award and a Stephen Hawking Medal for Science Communication.
It came after Anderson became Nasa's first artist in residence, a two-year commission to produce a piece of work completely at her creative freedom, which inspired her performance piece The End Of The Moon.
