Purpose This study aims to identify the factors influencing the adoption of extended reality (XR) applications in libraries for sustainable innovative services and reveal the challenges of adopting XR technology in libraries. Design/methodology/approach A systematic literature review was applied to address the study’s objectives. The 26 most relevant seminal studies published in peer-reviewed journals were selected to conduct the study. Findings The findings showed that access to digital collections, skill development, marketing, innovation and sustainable development factors influence the adoption of extended reality applications in libraries. The study illustrated that technical challenges, financial challenges, the unavailability of staff expertise and lack of institutional support caused barriers to the adoption of XR in libraries. Originality/value The study has added valuable literature to the existing body of knowledge. It has provided a framework to efficiently adopt extended reality in libraries for the delivery of sustainable, innovative services to library patrons.