To create AI-generated images via SMS using Replicate and Twilio Programmable Messaging, users need to set up a Twilio account, install Python and ngrok, and configure their account with a Replicate API token. They then write code in Flask to receive an incoming text message from Twilio, pass the prompt to Replicate's Stable Diffusion model, and generate an AI-generated image. After setting up the Flask app and configuring a Twilio phone number, users can send a prompt via SMS to their Twilio number and receive an AI-generated image in response. The tutorial also provides additional resources and tips for developers, including information on ngrok alternatives and using Twilio with Discord bots.