Micro-credential (MC) is an innovative and disruptive technology-based learning model. In higher education (HE), MCs are typically certified in the form of a digital badge (DB) issued to learners upon completion of a credential. The introduction of MCs and DBs has the potential to revolutionise the way in which HE institutions deliver degrees, and how students learn and achieve their tertiary qualifications. To explore this innovative learning, this study investigates the potentials and challenges of implementing MCs in HE. Through a systematic literature review of 56 peer-reviewed articles on MCs and related DBs in HE published between 2015 and 2021, we find that research on MCs in HE is gaining attention. While different aspects of MCs in HE have been studied using various research methodologies and theoretical lenses, further research is needed to capture the influence of technology and to understand different stakeholder perspectives. This study contributes to the growing literature on MCs in HE by synthesising the relevant knowledge areas into key themes and developing a conceptual framework for implementing MCs in HE. This study also identifies critical research gaps to advance the literature on MC implementation in HE.