Background Accurate medical image interpretation is an essential proficiency for multiple medical specialties, including dermatologists and primary care providers. A dermatoscope, a ×10–×20 magnifying lens paired with a light source, enables enhanced visualization of skin cancer structures beyond standard visual inspection. Skilled interpretation of dermoscopic images improves diagnostic accuracy for skin cancer. Objective Design and validation of Cutaneous Neoplasm Diagnostic Self-Efficacy Instrument (CNDSEI)—a new tool to assess dermatology residents’ confidence in dermoscopic diagnosis of skin tumors. Methods In the 2018–2019 academic year, the authors administered the CNDSEI and the Long Dermoscopy Assessment (LDA), to measure dermoscopic image interpretation accuracy, to residents in 9 dermatology residency programs prior to dermoscopy educational intervention exposure. The authors conducted CNDSEI item analysis with inspection of response distribution histograms, assessed internal reliability using Cronbach’s coefficient alpha (α) and construct validity by comparing baseline CNDSEI and LDA results for corresponding lesions with one-way analysis of variance (ANOVA). Results At baseline, residents respectively demonstrated significantly higher and lower CNDSEI scores for correctly and incorrectly diagnosed lesions on the LDA (P = 0.001). The internal consistency reliability of CNDSEI responses for the majority (13/15) of the lesion types was excellent (α ≥ 0.9) or good (0.8≥ α <0.9). Conclusions The CNDSEI pilot established that the tool reliably measures user dermoscopic image interpretation confidence and that self-efficacy correlates with diagnostic accuracy. Precise alignment of medical image diagnostic performance and the self-efficacy instrument content offers opportunity for construct validation of novel medical image interpretation self-efficacy instruments.