Most conventional information literacy classes apply direct instruction where students focus on memorizing target knowledge. As this approach promotes little active learning, while digital storytelling could effectively involve students, we proposed a digital storytelling approach to enhancing students' information literacy development in this study. In this research, we applied student-centered digital storytelling to enhance learners' development of information literacy. As the literature indicates that appropriate scaffolding is essential for effective digital storytelling, and learners need guidance on how to produce digital stories with in-depth content to achieve satisfactory learning outcomes, we integrated peer assessment (PA) into digital storytelling to guide learners to reflect on and critique their videos based on assessment rubrics and peer feedback, and then further improve their videos. We also conducted a quasi-experiment with two groups of elementary students to test the effectiveness of this strategy. The target knowledge was copyright and public license issues. The experimental group learned the content through the PA-enhanced digital storytelling approach, and the control group through the teacher feedback-enhanced approach. The results showed that the PA-enhanced approach to digital storytelling significantly outperformed the teacher feedback-enhanced approach in promoting students' learning of information literacy, self-efficacy, and critical thinking abilities; on the other hand, no significant differences existed between the two groups in terms of their learning motivation.