Gastric cancers are strongly associated with Helicobacter pylori infection, with intestinal metaplasia characterizing the background mucosa in most cases. However, only a subset of intestinal metaplasia cases proceed to carcinogenesis, and the characteristics of high-risk intestinal metaplasia that link it with gastric cancer are still unclear. We examined telomere reduction in five gastrectomy specimens using fluorescence in situ hybridization, and identified areas with localized telomere loss (outside of cancerous lesions), which were designated as short telomere lesions (STLs). Histological analyses indicated that STLs were characteristic of intestinal metaplasia accompanied by nuclear enlargement but lacking structural atypia, which we termed dysplastic metaplasia (DM). A review of gastric biopsy specimens from 587 H. pylori-positive patients revealed 32 cases of DM, 13 of which were classified as high-grade based on the degree of nuclear enlargement. All high-grade DM cases exhibited a telomere volume reduced to less than 60% of that of lymphocytes, increased stemness, and telomerase reverse transcriptase (TERT) expression. Two patients (15%) exhibited low levels of p53 nuclear retention. After a 10-year follow-up, 7 (54%) of the high-grade DM cases had progressed to gastric cancer. These results suggest that DM is characterized by telomere shortening, TERT expression, and stem cell proliferation, and high-grade DM is a high-grade intestinal metaplasia that likely represents a precancerous lesion of gastric cancer. High-grade DM is expected to effectively prevent progression to gastric cancer in H. pylori-positive patients.