Telomerase activation is a common feature of advanced human cancers and facilitates the malignant transformation of cultured human cells and in mice. These experimental observations are in accord with the presence of robust telomerase activity in more advanced stages of human colorectal carcinogenesis. However, the occurrence of colon carcinomas in telomerase RNA (Terc)-null, p53-mutant mice has revealed complex interactions between telomere dynamics, checkpoint responses and carcinogenesis. We therefore sought to determine whether telomere dysfunction exerts differential effects on cancer initiation versus progression of mouse and human intestinal neoplasia. In successive generations of ApcMin Terc-/- mice, progressive telomere dysfunction led to an increase in initiated lesions (microscopic adenomas), yet a significant decline in the multiplicity and size of macroscopic adenomas. That telomere dysfunction also contributes to human colorectal carcinogenesis is supported by the appearance of anaphase bridges (a correlate of telomere dysfunction) at the adenoma-early carcinoma transition, a transition recognized for marked chromosomal instability. Together, these data are consistent with a model in which telomere dysfunction promotes the chromosomal instability that drives early carcinogenesis, while telomerase activation restores genomic stability to a level permissive for tumor progression. We propose that early and transient telomere dysfunction is a major mechanism underlying chromosomal instability of human cancer.