Small polydisperse circular DNA (spcDNA) is a heterogeneous population of extrachromosomal circular molecules present in a large variety of eukaryotic cells. Elevated amounts of total spcDNA are related to endogenous and induced genomic instability in rodent and human cells. We suggested spcDNA as a novel marker for genomic instability, and speculated that spcDNA might serve as a mutator. In this study, we examine the presence of telomeric sequences on spcDNA. We report for the first time the appearance of telomeric repeats in spcDNA molecules (tel-spcDNA) in rodent and human cells. Restriction enzyme analysis indicates that tel-spcDNA molecules harbor mostly, if not exclusively, telomeric repeats. In rodent cells, tel-spcDNA levels are higher in transformed than in normal cells and are enhanced by treatment with carcinogen. Tel-spcDNA is also detected in some human tumors and cell lines, but not in others. We suggest, that its levels in human cells may be primarily related to the amount of the chromosomal telomeric sequences. Tel-spcDNA may serve as a unique mutator, through specific mechanisms related to the telomeric repeats, which distinguish it from the total heterogeneous spcDNA population. It may affect telomere dynamics and genomic instability by clastogenic events, alterations of telomere size and sequestration of telomeric proteins.