Digital literacy is a crucial skill for preschoolers, equipping them with the cognitive and technical abilities to use technology effectively. However, assessing their digital literacy objectively can be challenging due to age-specific limitations. To address this, this paper presents the design considerations for developing a game-based digital literacy assessment application tailored to preschoolers. The design prioritises enhancing engagement and motivation while simultaneously evaluating learning. Through a design-based research approach, the application was developed and evaluated. Key deliverables include a use case diagram, storyboard, and application. Evaluation results demonstrate the game’s ability to assess preschoolers’ hardware knowledge and enhance cognitive skills such as attention, memory, and visual discrimination. A game-based digital literacy assessment application is a promising tool for evaluating preschoolers’ digital literacy. Consequently, this helps them embrace the digital technology available to them. Future iterations can be enhanced through progressive difficulty levels, visual representations, picture-matching games, and educational components to further optimise preschoolers’ learning and assessment experiences.