Digital technologies are increasingly embedded in participatory urban design (PUD), reshaping how people communicate, visualize proposals, and negotiate decisions. These digitally mediated processes can influence participants’ subjective well-being (SWB) by shaping emotional experiences (e.g., satisfaction or frustration), social relations (e.g., belonging or conflict), and perceived agency during engagement. However, research on their implications for SWB remains fragmented and conceptually underdeveloped. This systematic review synthesizes 63 empirical studies published between 2010 and 2025 to examine what SWB-related outcomes have been reported, through which mechanisms digitally assisted PUD affects participants’ SWB, and under what conditions these effects occur. The analysis identifies four pathways linking digitally assisted PUD to SWB: (1) psychological and emotional change, (2) social capital building, (3) engagement through participation, and (4) agency and skill development. Reported outcomes (e.g., positive emotions, relationship building, collective learning, sense of agency, and place attachment) are mapped across five families of digital tools and three PUD process characteristics: degree of participation, participant group, and design-cycle stage. Findings show that digital tools can enhance SWB through multiple pathways, but may also introduce risks related to affordance, cognitive load, accessibility, and digital literacy. Outcomes are pathway-specific, uneven across groups, and shaped by contextual and methodological conditions. The paper proposes a conceptual framework to guide SWB-oriented PUD research, practice, and policy, and highlights the need for comparative, longitudinal, interdisciplinary, equity-focused, and mechanism-driven approaches.