Telomerase is a cellular reverse transcriptase specialized for use of a template carried within the RNA component of the enzyme ribonucleoprotein complex. Substrates for telomerase are single-stranded oligonucleotides in vitro and chromosome ends in vivo. In vitro, a bound substrate is extended by an initial round of DNA synthesis on the internal RNA template and in some cases by multiple rounds of template copying before product dissociation. In vivo, de novo synthesis of one strand of a telomeric repeat sequence by telomerase balances the sequence loss resulting from incomplete replication of linear chromosome ends by RNA primer-requiring DNA polymerases. Telomerase biochemistry has been studied extensively by using partially purified cell extracts. Telomerase components are being identified and beginning to be produced in recombinant form. This review focuses on the enzyme mechanism of telomerases from ciliate species, thus far the most intensively studied systems.