Abstract Background Constitutional mismatch repair deficiency (CMMRD) is a rare and extraordinarily penetrant childhood-onset cancer predisposition syndrome. Genetic diagnosis is often hampered by the identification of mismatch repair (MMR) variants of unknown significance and difficulties in PMS2 analysis, the most frequently mutated gene in CMMRD. We present the validation of a robust functional tool for CMMRD diagnosis and the characterization of microsatellite instability (MSI) patterns in blood and tumors. Methods The highly sensitive assessment of MSI (hs-MSI) was tested on a blinded cohort of 66 blood samples and 24 CMMRD tumor samples. Hs-MSI scores were compared with low-pass genomic instability scores (LOGIC/MMRDness). The correlation of hs-MSI scores in blood with age of cancer onset and the distribution of insertion-deletion (indel) variants in microsatellites were analyzed in a series of 169 individuals (n = 68 CMMRD, n = 124 non-CMMRD). Results Hs-MSI achieved high accuracy in the identification of CMMRD in blood (sensitivity 98.5% and specificity 100%) and detected MSI in CMMRD-associated tumors. Hs-MSI had a strong positive correlation with whole low-pass genomic instability LOGIC scores (r = 0.89, P = 2.2e-15 in blood and r = 0.82, P = 7e-3 in tumors). Indel distribution identified PMS2 pathogenic variant (PV) carriers from other biallelic MMR gene PV carriers with an accuracy of 0.997. Higher hs-MSI scores correlated with younger age at diagnosis of the first tumor (r = −0.43, P = 0.011). Conclusions Our study confirms the accuracy of the hs-MSI assay as ancillary testing for CMMRD diagnosis, which can also characterize MSI patterns in CMMRD-associated cancers. Hs-MSI is a powerful tool to pinpoint PMS2 as the affected germline gene and thus potentially personalize cancer risk.