Digital badges, widely known as alternative or micro-credentials, have gained increasing recognition in recent years as innovative pedagogical tools in higher education. Despite many anecdotal and conceptual statements of value, the effectiveness of using digital badges to improve learning performance is still largely unknown. This study addressed this gap by investigating the impact of these badges with added instructional scaffolding on pre-service teachers' perceived technology capabilities and their actual learning performance while studying within a large undergraduate technology integration course. Compared with similar participants who experienced traditional instructional projects instead of the badges, those learning with digital badges not only reported higher levels of perceived confidence in their technology integration skills but also achieved higher levels of course assignment and overall course grades. Conclusions from this study offered ways to improve learning performance with the support of digital badge technology and drew implications for future scholarship in this area.