The notions of literacy and literacy instruction have changed in profound ways as new technology and the Internet become central to the use of information and the acquisition of knowledge (Lankshear & Knobel, 2003; Leu, Kinzer, Coiro & Cammack, 2004). The social, cultural and technological changes point out the importance of integrating new literacies into classrooms literacy instruction in order to prepare students for 21^st century work, life and career opportunities (Ito et al., 2013; Leu & Kinzer, 2000). To support the development of digital literacy, a need exists to find effective ways to integrate technology within classroom instruction. Teachers play a central role in ensuring this need is met, particularly for students who attend school in low SES urban areas. This study addressed need by examining the complex situation of teachers’ understanding of digital literacy integration as revealed during their collaborative planning sessions while they designed a project-based learning (PBL) unit. This qualitative study used a case study design. Participants included third-grade teachers from an urban charter school that serves a low-income community. Data collection included observations of planning sessions, teacher interviews, researcher reflections and memos. Data were analyzed using constant comparative methods. This study indicated that the planning process was a dynamic, non-linear and an iterative process that required revisions and edits during the project planning and implementation period. Planning was a dynamic process created by multiple internal and external factors. This study illuminated the nature of the interactions of the teachers during planning meetings. Planning for the teachers was expressed in three different ways: collaborative, pair, and individual planning. This study revealed teachers demonstrated the shift in understanding of what it means to be literate in the 21st century. The third-grade team’s insights about digital literacy encompassed developing 21st century skills, changing the definition of what means to be literate, becoming a digital citizen, creating relevance to students’ lives, using technology for pleasure as well as teaching. The examination of the five teachers’ collaborative interactions as they planned to use digital technology offers insights into how to assist other teachers in those efforts.