The rapid development of digital technology in the Society 5.0 era requires students to possess competencies that extend beyond academic knowledge to include the ability to access, understand, evaluate, utilize, and produce information through digital technology effectively and responsibly. This study aims to analyze the role of digital literacy in improving students’ competencies and to identify essential skills that need to be developed in response to the demands of learning in the Society 5.0 era. The study employs a qualitative approach using a literature review method. Data were obtained from scientific articles published in Indonesian national journals accredited by SINTA 1–4 and international journals indexed by Scopus and Web of Science discussing digital literacy, digital competence, twenty-first-century skills, and Society 5.0. The findings indicate that digital literacy plays a strategic role in strengthening students’ critical thinking, problem-solving, communication, collaboration, information management, and creativity through the appropriate use of technology. Digital literacy also contributes to students’ awareness of digital ethics, information security, responsible technology use, and appropriate interaction within digital environments. The integration of digital literacy into learning requires teacher support, effective utilization of technology-based learning media, adaptive learning environments, and continuous development of students’ digital competencies. Therefore, digital literacy should be regarded as a fundamental competency for preparing students to adapt to technological transformation while maintaining human-centered values in the use of technology. Strengthening digital literacy in schools can consequently support the development of competent, creative, critical, adaptive, and responsible learners who are better prepared to face educational and social challenges in the Society 5.0 era.