Characteristic properties of type III CRISPR-Cas systems include recognition of target RNA and the subsequent induction of a multifaceted immune response. This involves sequence-specific cleavage of the target RNA and production of cyclic oligoadenylate (cOA) molecules. Here we report that an exposed seed region at the 3′ end of the crRNA is essential for target RNA binding and cleavage, whereas cOA production requires base pairing at the 5′ end of the crRNA. Moreover, we uncover that the variation in the size and composition of type III complexes within a single host results in variable seed regions. This may prevent escape by invading genetic elements, while controlling cOA production tightly to prevent unnecessary damage to the host. Lastly, we use these findings to develop a new diagnostic tool, SCOPE, for the specific detection of SARS-CoV-2 from human nasal swab samples, revealing sensitivities in the atto-molar range.