In all telomerases, the template region of the RNA subunit contains a region of telomere homology that is longer than the unit telomeric repeat. This allows a newly synthesized telomeric repeat to translocate back to the 3 end of the template prior to a second round of telomeric repeat synthesis. In the yeast Kluyveromyces lactis, the telomerase RNA (Ter1) template has 30 nucleotides of perfect homology to the 25-bp telomeric repeat. Here we provide strong evidence that three additional nucleotides at positions ؊2 through ؊4 present on the 3 side of the template form base-pairing interactions with telomeric DNA. Mutation of these bases can lead to opposite effects on telomere length depending on the sequence permutation of the template in a manner consistent with whether the mutation increases or decreases the base-pairing potential with the telomere. Additionally, mutations in the ؊2 and ؊3 positions that restore base-pairing potential can suppress corresponding sequence changes in the telomeric repeat. Finally, multiple other yeast species were found to also have telomerase RNAs that encode relatively long 7-to 10-nucleotide domains predicted to base pair, often with imperfect pairing, with telomeric DNA. We further demonstrate that K. lactis telomeric fragments produce banded patterns with a 25-bp periodicity. This indicates that K. lactis telomeres have preferred termination points within the 25-bp telomeric repeat.Telomeres are DNA and protein complexes present at the ends of eukaryotic chromosomes that function to protect chromosome ends from terminal sequence losses and fusions (3, 36). Telomeric DNA is typically composed of tandem 5-to 26-bp repeats that are sufficient for telomere function and that serve as binding sites for telomeric proteins (32). The ribonucleoprotein enzyme telomerase adds telomeric repeats to chromosome ends and prevents the gradual shortening that would otherwise occur. Telomerase synthesizes new telomeric repeats onto chromosome ends by using part of its RNA subunit as a template (13,14,31). Cells without telomerase encounter growth and viability problems once telomeres begin to become too short to properly function. In most human cells, telomerase activity is greatly reduced or absent and the ensuing telomere shortening functions to inhibit the formation of cancer by limiting the number of divisions that cells can undergo (4,7,16,30).Recognition of a telomeric end by telomerase in vivo is complex and requires a number of different interactions between components of telomerase and components of the telomere (32). Specialized proteins that bind the 3Ј single-stranded overhangs of telomeres, including the yeast Cdc13 protein, can interact directly with telomerase (9, 28). A critical aspect of telomerase's interaction with the telomeres comes through base pairing between the telomeric overhang and the template region of the telomerase RNA. In all known telomerases, the template region of the RNA subunit contains a region of telomere homology that is longer than the unit telomeric re...