<p>Immersive technology, including virtual reality (VR), augmented reality (AR), and mixed reality (MR), is now widely applied across various fields. However, performing tasks and solving problems in immersive environments requires a certain level of digital literacy – the ability to access, evaluate, and effectively use digital technology and information. Uncovering the relationships between digital literacy and the outcomes of immersive technology usage can contribute to designing more inclusive and responsive immersive systems, while also supporting efforts to reduce digital inequalities across different contexts. As such, this study conducted a systematic literature review to investigate how digital literacy affects the use of immersive technology, including the impacts, their forms, and underlying mechanisms. The results indicate that multiple interpretations of digital literacy exist within the literature and are commonly assessed by subjective measurements. Most studies focus on education and tourism, with VR and AR being the most studied types of immersive technology. The impacts of different levels of digital literacy on the use of immersive technology can be categorised into the sense of presence, experience, affection, behaviour and performance, with the effects being positive, negative, or neutral. The impacts on behaviour and affection all show a robust positive trend, whereas the effects on sense of presence and experience are mixed and sometimes contradictory across the reviewed studies. Four potential underlying factors, namely cognitive load, affection, expectation, and operational skills, are identified, offering possible explanations for how digital literacy influences the use of immersive technology. Findings can inform future research aiming at improving the design, development, and implementation of immersive technology, thereby helping to overcome the barriers posed by digital literacy.</p>