We present the recent work on an improved Standard-Model prediction for the rare decay $\pi^0\to e^+e^-$, which plays a crucial role in the test of the long-distance dynamics of the strong interaction. The reduced amplitude of the decay is determined by the pion transition form factor for $\pi^0\to\gamma^*\gamma^*$, for which we employ a dispersive representation that incorporates both time-like and space-like data as well as short-distance constraints. The resulting Standard-Model branching fraction, $ \text{BR}[\pi^0\to e^+e^-]=6.25(3)\times 10^{-8}$, reveals a ten-fold improvement in precision over experiment and sharpens constraints on physics beyond the Standard Model.