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Amid concerns about declining teacher well-being, this study tests whether digital literacy can buffer risks. Drawing on a nationwide survey of 3,021 Chinese primary and secondary teachers, we use multivariate regression and structural equation modeling to assess three literacy dimensions—technology knowledge and skills, use of digital tools in teaching, and digitally supported professional development—in relation to psychological, professional, and workplace well-being. All three dimensions are positively associated with each domain of well-being. Mechanism tests show dual mediation through teaching collaboration and teaching effectiveness, and a chain pathway from literacy → collaboration → effectiveness → well-being. Results position digital literacy as a practical lever to strengthen teacher well-being and inform policy.