Colorectal cancer (CRC) with deficient DNA mismatch repair (dMMR) is characterized by hypermutation leading to abundant neoantigens that activate an antitumor immune response in the tumor microenvironment. Immune checkpoint inhibitors (ICIs) have transformed the treatment of this subset of CRC and other solid tumors with dMMR, by producing frequent and durable responses that extend patient survival. Recently, the anti-programmed death-1 (PD-1) antibody pembrolizumab was shown to produce significantly longer progression-free survival with fewer adverse events compared with chemotherapy as first-line treatment of metastatic CRC (mCRC) with dMMR. Accordingly, single-agent pembrolizumab represents a new standard of care for dMMR mCRCs including patients with Lynch syndrome and the more common sporadic cases. Furthermore, data indicate that the combination of PD-1 and cytotoxic T-cell lymphocyte-4 inhibitors was more effective than single-agent PD-1 inhibition in patients with dMMR mCRCs, suggesting nonredundant mechanisms of action. Although the benefit of ICIs is currently limited to metastatic disease, studies evaluating ICIs as neoadjuvant and adjuvant therapy in earlier-stage dMMR CRC are ongoing. Despite success of ICIs in the treatment of metastatic dMMR cancers, an appreciable proportion of these tumors demonstrate intrinsic or acquired resistance, and biomarkers to identify these patients are needed. Advances in the understanding of immunotherapy resistance mechanisms hold promise for both biomarker identification and development of novel strategies to circumvent treatment resistance. In this review, we present a comprehensive overview of the evidence for the role of immunotherapy in the treatment of dMMR CRC, discuss resistance mechanisms, and outline potential strategies to circumvent primary and secondary resistance with the goal of broadening the benefit of ICIs.