We have reconstituted wild type or mutant telomerase activity in two human cell lines that lack constitutive expression of both core subunits of the enzyme and maintain telomeres by a telomerase-independent mechanism (ALT cells). Wild type telomerase RNA and four telomerase RNAs with single point mutations in their template domain were used to express enzymes specifying different telomeric DNA sequences. Expression of wild type telomerase for up to 32 days had no detectable effect on cell growth or viability. In contrast, cells expressing mutant telomerases had slower growth rate, abnormal cell cycle and reduced viability. Dramatically aberrant nuclei, typical of cells undergoing mitotic catastrophe, and large numbers of fused chromosomes were also characteristic of these populations. Notably, all phenotypes were apparent within the first few cell divisions after expression of the enzymes. Unlike wild type, mutant telomerase activity was progressively selected against with cell culturing, and this correlated with the disappearance of cells with aberrant phenotypes. Our results suggest that even very limited synthesis of mutated sequences can affect telomere structure in human cells, and that the toxicity of mutant telomerases is due to telomere malfunction.