Wilms tumour, a kidney cancer with several subtypes, is one of the most common cancers of early childhood, usually affecting children younger than 10.
Lead author and Otago PhD candidate Ben Halliday said the researchers uncovered mutations in a gene called TRIM28 which caused a distinctive subtype of Wilms tumour, often affecting children in their first year of life.
There had previously been "no good way to diagnose it with certainty".
"We believe our discovery will give paediatric oncologists the confidence to treat these children with surgery alone.
"By omitting chemotherapy, the children can avoid further long-term damaging health consequences," he said.
Mr Halliday was "quite excited" at the Otago-led research outcome, to which he had contributed through a thesis for his Otago MSc in genetics, and later work during a summer studentship.
The study, published in PLoS Genetics, focused on five children with the tumour subtype, and included two children from one New Zealand family.
The researchers said loss of TRIM28 function had "not previously been implicated in human cancer"; and TRIM28 also appeared to be essential for normal kidney development.
It was "quite amazing" that such broader findings had also been made, which could prove "quite important for kidney development" and could help future research, Mr Halliday said.
Senior author Prof Ian Morison, of the Otago pathology department, said the study demonstrated the enormous power of the human genome project.
State-of-the-art sequencing technology, also used in this study, was being applied to cancers and genetic conditions to divide diseases into actionable subgroups, providing accurate diagnoses that could inform treatment for rare disorders.
Research collaborators included scientists in Japan, the UK and Australia.