Chilli (Capsicum spp.) is an economically important vegetable and spice. The Tropical Vegetable Research and Development Center, Kasetsart University, Kamphaeng Saen Campus has collected more than 2500 chilli germplasm accessions since 1989. Investment to maintain and evaluate such a large germplasm collection is high. For efficient germplasm management and to reduce the cost of germplasm maintenance, a core collection needs to be established. Therefore, this study aimed to investigate the genetic diversity of chilli germplasm using microsatellites. A total of 230 chilli germplasm accessions were evaluated using ten anchored Capsicum microsatellite loci. These loci generated 42 alleles with a size ranging from 87 to 323 bp. The average polymorphic information content was 0.57, ranging from 0.414 to 0.681, and the probability of identity (PI) ranged from 0.17 to 0.49. The combined PI of the ten microsatellite loci was 2.30 × 10− 6. The similarity index ranged from 0.29 to 1.00. The 230 chilli accessions were divided into two major groups. Group I comprised mainly C. annuum, and group II comprised all four Capsicum species with the majority being C. frutescens, C. chinense and C. baccatum. The matrix comparison showed that a cophenetic correlation of 0.798 indicated the best fit of the obtained dendrogram. The PowerCore program selected 28 representative chilli accessions to form a core collection, which maintained a similar level of diversity to that of the overall 230 chilli accessions. The representative alleles in those 28 core accessions equalled all the alleles present in the entire collection.