Purpose: This study aimed to acquire a comprehensive understanding of the digital literacy skills possessed by first-year students and how they impact students' participation in online classes. Design/methodology/approach: This research was conducted using a quantitative method to investigate first-year students' digital literacy and its effect on their interaction in online learning. Nine hundred and two students from 19 online English writing classes were invited to complete an online survey questionnaire. The sampling approach was conducted by a nonrandom method. Prior to the data collection, the instrument was reviewed by researchers and peers with quantitative and Indonesian language backgrounds. The procedure was conducted to ensure that the instrument covered the objective of the research. Findings: The results showed that students digital literacy in the first semester, in general, is still in the low category. The average score for each competency area still varies. The average score on information and data literacy competence was low. The average score for communication and collaboration competence was in the medium category. The average score for the digital content creation competence area is low. Practical implications: The authors suggest that educational institutions should consider organizing primary student digital literacy training or optimizing the lecture process to improve students' digital literacy and further research could usefully explore how information and communication technology (ICT) skills affect student performance. Social implications: The study reveals the importance of digital literacy of students for online teaching learning. In order to achieve quality teaching in online methods, the digital literacy is a must for students. The study highlights the limitations of the study and indicates the necessity for further research in this area. The findings have immense implications for practice in a distance learning university, where online teaching learning has become a new normal post-COVID-19. Originality/value: The authors present new findings on the digital literacy of first-year students and their effect on their interaction in online learning. The authors also make connections between digital literacy and student engagement in online classes, which is a significant contribution to the field. This paper also provides a comprehensive review of the literature on digital literacy and e-learning, which adds to the scholarship in the field.