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The pervasive integration of digital technology into daily life has precipitated growing concerns regarding its potential for addictive use and subsequent detrimental effects on mental health. This comprehensive review synthesizes current empirical research to explore the multifaceted relationship between digital addiction—encompassing social media, gaming, and smartphone addiction—and various mental health outcomes. A systematic analysis of literature from databases such as PubMed, PsycINFO, and Google Scholar was conducted, focusing on studies from 2010 to 2023. Findings consistently indicate a significant positive correlation between digital addiction and increased levels of anxiety, depression, loneliness, and psychological distress. Neurobiological studies suggest that digital addiction shares mechanisms with substance-based addictions, including dysregulation of the brain’s reward system, primarily the dopamine pathways. Furthermore, this paper examines mediating factors such as the fear of missing out (FoMO), sleep disruption, and social comparison, which exacerbate negative mental health consequences. Despite the evident correlations, the review acknowledges the challenge of establishing causality due to the cross-sectional nature of most studies. The paper concludes by emphasizing the urgent need for public health initiatives, digital literacy education, evidence-based interventions, and future longitudinal research.