The current research paper delves into the intricate convergence of literature pedagogy and digital technology in the 21st century. The shift from classical classroom instruction to digitally enriched learning spaces has altered the way literature is read, taught, and interpreted. Based on theories of digital pedagogy, media ecology, and reader-response criticism, this research study analyzes the difficulties teachers encounter in developing critical reading, empathy, and interpretive complexity in digital environments. It contends that technology, though democratizing access to literary texts and discourse, has split up attention, changed comprehension modes, and created issues of authenticity and authorship. The article concludes that the solution to teaching literature successfully in the digital world is finding a balance between technological innovation and humanistic richness. These changes require educators to rethink pedagogical approaches, curriculum design, and the literary text's role itself. In a world where screens mediate more and more of our reading experiences, the immersive nature of literature threatens to get lost in hyperlinked, multitasking spaces that value immediacy over deep thinking. Here, the process of interpretation—once grounded in close reading and dialogic response—now struggles against algorithmic hints, AI-driven criticism, and an ethos of ease. Furthermore, the move to online environments threatens traditional classroom relationships. The literary canon, once studied via face-to-face discussions and annotated print books, now must share the space with digital discussion boards, virtual classrooms, and asynchronous forms of participation. This redefinition impacts not merely how students work with texts but also how they work with peers, instructors, and the interpretive process itself.