Telomere position effect (TPE) is the influence of telomeres on subtelomeric epigenetic marks and gene expression. Previous studies suggested that TPE depends on genetic background. As these analyses were performed on different chromosomes, cell types and species, it remains unclear whether TPE represents a chromosome-rather than genetic background-specific regulation. We describe the development of a Linear Human Artificial Chromosome (L-HAC) as a new tool for telomere studies. The L-HAC was generated through the Cre-loxP-mediated addition of telomere ends to an existing circular HAC (C-HAC). As it can be transferred to genetically distinct cell lines and animal models the L-HAC enables the study of TPE in an unprecedented manner. The HAC was relocated to four telomerase-positive cell lines via microcell-mediated chromosome transfer and subsequently to mice via blastocyst injection of L-HAC(+)-ES-cells. We could show consistent genetic background-dependent adaptation of telomere length and telomere-associated de novo subtelomeric DNA methylation in mouse ES-R1 cells as well as in mice. Expression of the subtelomeric neomycin gene was inversely correlated with telomere length and subtelomeric methylation. We thus provide a new tool for functional telomere studies and provide strong evidence that telomere length, subtelomeric chromatin marks and expression of subtelomeric genes are genetic background dependent.