Early literacy often begins long before children start school and before they master technical skills that include reading and writing. The main goal of this theoretical paper is to present the importance of encouraging literacy at an early and preschool age of a child, in order to build the foundations for mature literacy, and to present various ways of encouraging early literacy using modern technologies. Researches of early literacy have shown that the feeling for reading and writing develops before children can actually read and write. Children demonstrate early literacy in the activities such as playing, talking and drawing, and with time, as they start experimenting with writing and reading, they discover that those activities provide them with new and interesting possibilities to convey meaning through language signs. Persons in a child’s environment play an important role in rendering the child literate since they determine when, in which situations and how often they introduce the child to the materials and tools for the development of literacy. In some cultures, the development of literacy is related to formal education, whereas becoming literate in modern western societies begins already in preschool institutions, kindergartens and at home. In order to understand the development of literacy, it is crucial to study the environments in which children develop and in what ways these environments provide opportunities to involve children in the work with papers, stationery and books. However, since the daily use of digital technology has become more and more pronounced in the last decade, it is necessary to look at the role of digital technology and the possibilities of its application in working with children in the field of early literacy. This work is directed precisely towards the research of opportunities and challenges in the inclusion of digital technology in the processes of encouraging the development of literacy in children of early and preschool age.