This essay explores the emerging relationship between the Metaverse and generative AI (GenAI). “The Metaverse” is a term used to describe 3D virtual worlds that offer potential immersive spaces for interaction, entertainment, and business. However, these worlds are often hampered by a lack of dynamic content and tend to become static over time. Concurrently, GenAI, with its ability to facilitate content creation and simulate intelligent behaviors, redefines the boundaries between creativity and automation. By using the notion of non-player characters (NPCs) in virtual worlds as an example, it is highlighted how GenAI can facilitate a more dynamic and responsive Metaverse. While this technological combination holds promise, it also raises severe ethical concerns, calling for a renewed engagement with earlier literature on what constitutes a ‘good’ life online. Based on this literature, managerial implications to promote sustainable development of these technologies are presented: creation of AI architectures that facilitate creativity, ethical governance, and new mechanisms for value generation. The discussion concludes by stating that technology-wise, we have the tools needed to create an immersive Metaverse, while ethically, more work is needed to align these technologies with human values.