Real-time data plays a critical role in Power BI dashboards by providing up-to-the-minute insights into business performance. Dashboards can be connected to live data sources such as IoT devices, databases, or streaming data services. This allows businesses to monitor key metrics as they change in real-time, which is crucial for time-sensitive operations like supply chain management or customer support. Real-time dashboards provide automatic updates without manual intervention, enabling decision-makers to act quickly on emerging trends or issues, enhancing operational efficiency and responsiveness.