The spacecraft, known as the Star-Planet Activity Research CubeSat, or SPARCS, is a new NASA-funded space telescope and will be launched in 2021.
The mission, including spacecraft design, integration and resulting science, is led by Arizona State University's School of Earth and Space Exploration (SESE).
"This is a mission to the borderland of astrophysics and astrobiology," said Evgenya Shkolnik, assistant professor at SESE.
"We are going to study the habitability and high-energy environment around stars that we call M dwarfs," said Shkolnik.
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Having less than half the Sun's size and temperature, they shine with barely one per cent its brightness.
Astronomers have discovered that essentially every M dwarf star has at least one planet orbiting it, and about one system in four has a rocky planet located in the star's habitable zone.
This is the potentially life-friendly region where temperatures are neither too hot nor too cold for life as we know it, and liquid water could exist on the planet's surface.
Since M dwarfs are so plentiful, astronomers estimate that our galaxy alone contains roughly 40 billion rocky planets in habitable zones around their stars.
So as astronomers begin to explore the environment of exoplanets that dwell in other stars' habitable zones, M dwarf stars figure large in the search, researchers said.
The heart of the SPARCS spacecraft will be a telescope with a diameter of nine centimetres plus a camera with two ultraviolet-sensitive detectors to be developed by NASA's Jet Propulsion Laboratory.
Both the telescope and camera will be optimised for observations using ultraviolet light, which strongly affects the planet's atmosphere and its potential to harbour life on the surface.
Although the orbiting Hubble Space Telescope can view stars at ultraviolet wavelengths unhindered, its overcrowded observing schedule would let it dedicate only the briefest of efforts to M dwarfs.