Is it wrong to use literally to mean figuratively?

It is widely disliked, and it is not new. Literally has been used as an intensifier for emphasis since at least the eighteenth century, by writers generally considered careful ones.

The objection is straightforward: literally means "in a literal sense, not metaphorically", so using it to introduce a metaphor appears to reverse its meaning. I literally died laughing says something the speaker plainly does not mean.

The historical record complicates the objection. Charles Dickens, Mark Twain, Charlotte Brontë, James Joyce and Vladimir Nabokov all used literally as an intensifier attached to something figurative. Major dictionaries, including Merriam-Webster and the Oxford English Dictionary, record this as an established sense while noting it is contested. Dictionaries describe usage; they do not license it.

The pattern is not unusual. Really means "in reality" and very derives from the Latin for "true", yet both are now pure intensifiers with no one objecting. Terribly and awfully have drifted even further. Literally is following a well-trodden path — it is simply doing so recently enough that people remember the earlier sense.

The practical case against it is not that it breaks a rule but that it costs you something. Literally is the only word English has for signalling that a statement is not a metaphor, and every intensifying use erodes its ability to do that job. The building literally collapsed should be unambiguous.

So the sensible position: it is defensible, it will irritate some readers, and in writing where precision matters it is worth reserving for its original sense.

If you want the emphasis without the objection, English offers plenty: absolutely, genuinely, positively, downright, or simply a stronger verb. I was helpless with laughter does more work than I literally died laughing and cannot be argued with.