Telomere shortening and telomerase activation both occur in human tumors. Telomere shortening has been proposed to have two conflicting roles in tumorigenesis: tumor suppression and initiation of chromosomal instability. Similarly, while telomerase activation is suggested to be necessary for tumor growth, telomerase may help to stabilize genomic instability. Here we review what is known about these conflicting roles and propose a framework to understand the role of telomerase in cancer progression.