Cancers arising from germline DNA mismatch-repair or polymerase-proofreading deficiencies (MMRD and PPD) in children harbour the highest mutational and microsatellite insertion/deletion (MS-indel) burden in humans and are lethal due to inherent resistance to chemo-irradiation. Although immune checkpoint inhibitors (ICI) have failed to benefit children in previous studies, we hypothesized that hypermutation caused by MMRD and PPD will improve outcomes following ICI in these patients. ICI treatment of 45 progressive/recurrent tumours from 38 patients revealed durable objective responses in the majority, culminating in 3-year survival of 41.4%. High mutation burden predicted response for ultra-hypermutant cancers (>100 mutations/Mb) enriched for combined MMRD+PPD, while MS-indels predicted response in MMRD tumours with lower mutation burden (10-100 mutations/Mb). Further, both mechanisms were associated with increased immune infiltration even in “immunologically-cold” tumours such as gliomas, contributing to the favorable response. Pseudo-progression (flare) was common and associated with immune activation in both the tumour microenvironment and systemically. Further, patients with flare continuing ICI treatment achieved durable responses. Our study demonstrates improved survival for patients with tumours not previously known to respond to ICI, including CNS and synchronous cancers, and identifies the dual roles of mutation burden and MS-indels in predicting sustained responses to immunotherapy.