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Abstract Objectives This study aims to validate the diagnostic accuracy of a novel urine‐based DNA methylation test in patients with suspected upper tract urothelial carcinoma (UTUC) on CT urography and to assess its potential to eliminate the need for diagnostic ureterorenoscopy (URS) in selected patients, expedite treatment and identify high‐grade tumours suitable for neoadjuvant chemotherapy. Patients and Methods We prospectively collected urine samples from 46 consecutive patients with suspected UTUC in computed tomography and analysed them using the Bladder CARE™ methylation test. Test performance was evaluated against final pathology from URS biopsies and/or surgical specimens. We performed Youden Index analysis to optimise diagnostic cut‐off values and assessed correlations between Bladder CARE Index (BCI) levels and tumour characteristics, particularly grade differentiation. Results Using the manufacturer's cut‐off (BCI > 2.5), the test demonstrated 95% sensitivity, 69% specificity, 70% positive predictive value and 95% negative predictive value (NPV), significantly outperforming cytology (11% sensitivity). An optimised, study‐derived cut‐off (4.35) further improved specificity to 92% with sensitivity and NPV remaining ≥95%. Importantly, a higher threshold (BCI > 10) yielded 100% specificity and 100% PPV, although at the expense of sensitivity (65%). Median BCI values differed between high‐grade (38.6) and low‐grade tumours (9.45), suggesting utility for non‐invasive grade assessment. BCI also correlated with tumour size (β = 12 mm per log10 increase, p = 0.08). Conclusion This novel urine‐based DNA methylation test offers high diagnostic accuracy for UTUC detection. However, clinical interpretation should be threshold dependent. While BCI values >2.5 show high sensitivity, the PPV of 70% indicates a relevant proportion of false‐positive results, and diagnostic URS remains warranted in this range. In contrast, high positive values (BCI > 10) demonstrated 100% specificity and PPV and could enable direct progression to definitive surgery without diagnostic URS, avoiding procedure‐related complications and expediting treatment. The correlation with tumour grade addresses a critical need for identifying candidates for neoadjuvant chemotherapy without invasive tissue diagnosis.