The development of ICT has revolutionized the way library services are offered all over the world. Digital literacy is becoming a core competence among academic librarians. This review highlights the contribution of digital literacy skills in improving digital reference services at the university libraries in Nigeria. The review focuses on digital literacy skills, digital reference services, the use of digital information resources, and challenges of delivering library services with the aid of technology. From past studies, it is evident that a librarian with a high level of digital competence can easily offer prompt, accurate, and customer-oriented reference services via electronic media such as emails, online databases, institutional repositories, web communications, and virtual reference systems. Despite the use of ICT in higher education institutions, there are many challenges in delivering library services using ICT in the university libraries in Nigeria. These challenges include: lack of ICT infrastructure, unstable electric power supply, inadequate funding, lack of professional training, poor maintenance culture, and inadequacy of skilled human resources in web technologies. This results in poor delivery of the digital services, limiting users from accessing quality information sources. This review demonstrates the importance of continuous professional development, strategic investments in digital technologies, favorable institutional policies, and sustainable sources of funding in improving the delivery of the digital services. It also emphasizes the importance of improving the digital skills of librarians to foster innovation, improve user experience, teach and conduct research, and ensure the sustainability of the libraries in the digital environment. This paper offers valuable insights to library managers, university administrators, policymakers, and researchers on how to improve the digital transformation efforts in academic libraries in developing nations.