This paper first explores the revolutionary changes in the information environment such
as the dominance of digital information, restructuring of scholarly communications. Digitization of
user working space, and paradigm shift in digital library development. It then describes the
responses libraries as illustrated by innovative applications to restructure library services, to extend
information services, and to engineer user-oriented service mechanisms. While admitting the
changes are impressive, the author points out that libraries and librarians still have to meet their key
challenge as knowledge workers. We are experiencing a revolutionary period in our information
environment which is forcing, and will continuously force, fundamental changes in the ways
libraries define themselves and operate their services. This paper will analyzes some of the major
trends in the environment, present different actions libraries have been taking to respond to the
changes, and then explore knowledge-based transitions of library services in the digital information
environment.