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Health literacy is a public issue and plays a crucial role in improving health outcomes by empowering individuals to make informed decisions, effectively manage diseases, and utilise healthcare services appropriately. The aim of the systematic review is to examine current literature on health literacy and impact on health outcomes as well as the barriers hindering health literacy, gaps and possible suggestions to improve health literacy in Nigeria and its applications across the globe. A systematic review was performed according to Arksey and O’Malley’s methodological framework and followed PRISMA reporting flowchart. Most of the studies were designed to assess the impact of health literacy on health outcomes in Nigeria, covering various health issues such as HIV, tuberculosis, reproductive health, hypertension and diabetes. Most of the studies demonstrated a positive link between health literacy and improved health outcomes. Health literacy has the potential to promote behaviour change, disease-related knowledge and improve health outcomes in different population groups.