Esports have increased in popularity among young people over the past decade. There is evidence that involvement in esports helps young players to develop skills that are needed in 21st century societies and increasingly valued by employers. However, there has been no systematic investigation of what 21st century skills can be developed through esports participation and how these skills are acquired through esports. This paper presents a systematic review of the literature for the purpose of providing a holistic understanding of the impact of esports on the development of 21st century skills in young people. The review focuses on the methodologies employed in esports research, the effects of different types of esports games on the development of various skills, the mechanics embodied in esports through which these skills are acquired and the potential negative effects and trade-offs of esports participation. The findings show that the literature has paid most attention to collaboration and communication skills, with less focus on other life and career skills related to creativity and innovation, information literacy and citizenship. The review also reveals the possibility of transferring acquired skills, such as those in leadership and communication, to the real-world context. Further research is needed on the transferability of a wider range of skills from esports to broader settings, on instruments and designs for examining the value of esports for educational purposes, and other areas that are not well covered in the literature. Identifying the skill development potential of esports has implications for designing specific skill development programmes for students, making pedagogical innovations for teachers’ professional development and empowering educational change at the school level.