bEst1 and Ebs1 in Saccharomyces cerevisiae are paralogous proteins that arose through whole-genome duplication and that serve distinct functions in telomere maintenance and translational regulation. Here we present our functional analysis of the sole Est1/Ebs1 homologue in the related budding yeast Kluyveromyces lactis (named KlEst1). We show that similar to other Est1s, KlEst1 is required for normal telomere maintenance in vivo and full telomerase primer extension activity in vitro. KlEst1 also associates with telomerase RNA (Ter1) and an active telomerase complex in cell extracts. Both the telomere maintenance and the Ter1 association functions of KlEst1 require its N-terminal domain but not its C terminus. Analysis of clusters of point mutations revealed residues in both the N-terminal TPR subdomain and the downstream helical subdomain (DSH) that are important for telomere maintenance and Ter1 association. A UV cross-linking assay was used to establish a direct physical interaction between KlEst1 and a putative stem-loop in Ter1, which also requires both the TPR and DSH subdomains. Moreover, similar to S. cerevisiae Ebs1 (ScEbs1) (but not ScEst1), KlEst1 confers rapamycin sensitivity and may be involved in nonsense-mediated decay. Interestingly, unlike telomere regulation, this apparently separate function of KlEst1 requires its C-terminal domain. Our findings provide insights on the mechanisms and evolution of Est1/Ebs1 homologues in budding yeast and present an attractive model system for analyzing members of this multifunctional protein family.T elomeres are specialized nucleoprotein structures that maintain the integrity of eukaryotic chromosomal termini by protecting them from fusion and recombination and promoting their replication (for reviews, see references 12, 23 and 32). In most organisms, telomeric DNA consists of short repetitive sequences that are rich in G residues on the 3= end-containing strand (G strand). The repeats on this strand are replenished by the telomerase ribonucleoprotein (RNP), whose essential polymerization function is mediated by two core components: a catalytic reverse transcriptase protein, telomerase reverse transcriptase (TERT), and a template-specifying RNA, telomerase RNA (TER) (for reviews, see references 2 and 30).The telomerase RNP in the budding yeast Saccharomyces cerevisiae has been extensively characterized and contains two auxiliary protein components named Est1 and Est3. Both components are essential for telomere maintenance in vivo but dispensable for telomerase activity in vitro. A major function of Est1 is to promote the recruitment of the telomerase complex to chromosome ends (33). This function is believed to require a physical interaction between Est1 and the telomere end-binding protein Cdc13, as well as an interaction between Est1 and telomerase RNA. The domains of Est1 and its binding targets responsible for these interactions have been characterized to some extent, but not in great detail. For example, in S. cerevisiae, a bulged stem and surrounding nuc...