Blood flow in microcirculation shows several interesting phenomena that can be used to develop microfluidic devices for blood separation and analysis in continuous flow. In this study we present a novel continuous microfluidic device for partial extraction of red blood cells (RBCs) and subsequent measurement of RBC deformability. For this purpose, we use polydimethylsiloxane (PDMS) microchannels having different constrictions (25%, 50% and 75%) to investigate their effect on the cell-free layer (CFL) thickness and separation efficiency. By using a combination of image analysis techniques we are able to automatically measure the CFL width before and after an artificial constriction. The results suggest that the CFL width increases with enhancement of the constriction and contributes to partial cell separation. The subsequent measurements of RBCs deformation index reveal that the degree of deformation depends on the constriction geometries and hematocrit after the cell separation module. The proposed microfluidic device can be easily transformed into a simple, inexpensive and convenient clinical tool able to perform both RBC separation and deformability analysis in one single device. This would eliminate the need for external sample handling and thus reducing associated labor costs and potential human errors.