Mismatch repair protein deficiency (MMR-D) and high microsatellite instability (MSI-H) are features of Lynch syndrome–associated colorectal carcinomas and have implications in clinical management. We evaluate the ability of a targeted next-generation sequencing panel to detect MMR-D and MSI-H based on mutational phenotype. Using a criterion of >40 total mutations per megabase or >5 single-base insertion or deletion mutations in repeats per megabase, sequencing achieves 92% sensitivity and 100% specificity for MMR-D by immunohistochemistry in a training cohort of 149 colorectal carcinomas and 91% sensitivity and 98% specificity for MMR-D in a validation cohort of 94 additional colorectal carcinomas. False-negative samples are attributable to tumor heterogeneity, and next-generation sequencing results are concordant with analysis of microsatellite loci by PCR. In a subset of 95 carcinomas with microsatellite analysis, sequencing achieves 100% sensitivity and 99% specificity for MSI-H in the combined training and validation set. False-positive results for MMR-D and MSI-H are attributable to ultramutated cancers with POLE mutations, which are confirmed by direct sequencing of the POLE gene and are detected by mutational signature analysis. These findings provide a framework for a targeted tumor sequencing panel to accurately detect MMR-D and MSI-H in colorectal carcinomas.