To assess the role of telomerase in the development of liposarcomas, we measured telomerase activity in 36 malignant and seven benign lipomatous neoplasias from 34 patients. A sensitive polymerase chain reaction-based telomerase assay (the telomeric repeat amplification protocol) was applied. Shortening or elongation of telomeric repeat fragment lengths, as measured by using hybridization with a telomere-specific oligonucleotide probe, was correlated with the presence of telomerase activity. The latter was demonstrable in 69% of malignant tumors. Benign tumors can be distinguished from malignant neoplasias on the basis of telomerase activity. However, telomerase expression seems to be characteristic of poorly differentiated liposarcomas. Myxoid/round cell liposarcomas exhibited a higher telomerase activity level than the classical low-grade variants. Telomerase activity was not correlated with age at the time of diagnosis or with sex. In most cases, telomerase-positive tumors showed higher proliferation indices than did neoplasias lacking telomerase. All eight recurrences expressed telomerase activity, reflecting a close association of telomerase with the biological behavior of liposarcomas. Our findings suggest that telomerase may play a key role in the establishment and progression of malignant lipomatous tumors.