To make e-learning in higher education truly interactive, it is our assumption that teachers will have to rethink their pedagogical practice and move from the traditional notion of objectivist instructional design to a constructivist pedagogical practice, creating learning communities of inquiry. Drawing on this notion, we define digital literacy of university teachers as “the ability to create online learning communities enabling cognitive and social presence.” This could be accomplished by creating learning communities of inquiry. The article describes the characteristics of learning communities of inquiry and presents findings from a study depicting current pedagogical practice in university online education. The findings of the study show that university teachers seem to lack confidence in their role as creators of learning communities and prefer objectivist instructional design as their prevalent pedagogical practice. Finally, conclusions and implications for practice in order to achieve a higher level of digital literacy among university teachers are suggested.