In bakers' yeast, in vivo telomerase activity requires a ribonucleoprotein (RNP) complex with at least four associated proteins (Est2p, Est1p, Est3p, and Cdc13p) and one RNA species (Tlc1). The function of telomerase in maintaining chromosome ends, called telomeres, is tightly regulated and linked to the cell cycle. However, the mechanisms that regulate the expression of individual components of telomerase are poorly understood. Here we report that yeast RNase III (Rnt1p), a double-stranded RNA-specific endoribonuclease, regulates the expression of telomerase subunits and is required for maintaining normal telomere length. Deletion or inactivation of RNT1 induced the expression of Est1, Est2, Est3, and Tlc1 RNAs and increased telomerase activity, leading to elongation of telomeric repeat tracts. In silico analysis of the different RNAs coding for the telomerase subunits revealed a canonical Rnt1p cleavage site near the 3' end of Est1 mRNA. This predicted structure was cleaved by Rnt1p and its disruption abolished cleavage in vitro. Mutation of the Rnt1p cleavage signal in vivo impaired the cell cycle-dependent degradation of Est1 mRNA without affecting its steady-state level. These results reveal a new mechanism that influences telomeres length by controlling the expression of the telomerase subunits.