Stem cells are controlled, in part, by genetic pathways frequently dysregulated during human tumorigenesis. Either stimulation of Wnt/beta-catenin signalling or overexpression of telomerase is sufficient to activate quiescent epidermal stem cells in vivo, although the mechanisms by which telomerase exerts these effects are not understood. Here we show that telomerase directly modulates Wnt/beta-catenin signalling by serving as a cofactor in a beta-catenin transcriptional complex. The telomerase protein component TERT (telomerase reverse transcriptase) interacts with BRG1 (also called SMARCA4), a SWI/SNF-related chromatin remodelling protein, and activates Wnt-dependent reporters in cultured cells and in vivo. TERT serves an essential role in formation of the anterior-posterior axis in Xenopus laevis embryos, and this defect in Wnt signalling manifests as homeotic transformations in the vertebrae of Tert(-/-) mice. Chromatin immunoprecipitation of the endogenous TERT protein from mouse gastrointestinal tract shows that TERT physically occupies gene promoters of Wnt-dependent genes. These data reveal an unanticipated role for telomerase as a transcriptional modulator of the Wnt/beta-catenin signalling pathway.