Teacher self-efficacy is a critical psychological construct that influences educators’ beliefs about their ability to effectively plan, organize, and execute instructional activities. In online learning environments, teacher self-efficacy becomes increasingly important as educators face challenges related to technology integration, student engagement, digital communication, and virtual classroom management. This study examines the role of teacher self-efficacy in online learning environments and its relationship with instructional effectiveness, student engagement, job satisfaction, and academic outcomes. A systematic review of contemporary literature published between 2018 and 2026 was conducted to identify key factors influencing teacher self-efficacy in digital education. Findings reveal that teachers with high levels of self-efficacy demonstrate greater adaptability, technological competence, instructional innovation, and confidence in managing online classrooms. Conversely, low self-efficacy is associated with technology anxiety, reduced instructional effectiveness, and lower student engagement. The study concludes that professional development, institutional support, technological infrastructure, and positive teaching experiences significantly enhance teacher self-efficacy in online education.