The stability of chromosome ends, the telomeres, is dependent on the ribonucleoprotein telomerase. In vitro, telomerase requires at least one RNA molecule and a reverse transcriptase-like protein. However, for telomere homeostasis in vivo, additional proteins are required. Telomerase RNAs of different species vary in size and sequence and only few features common to all telomerases are known. Here we show that stem-loop IVc of the Saccharomyces cerevisiae telomerase RNA contains a structural element that is required for telomerase function in vivo. Indeed, the distal portion of stem-loop IVc stimulates telomerase activity in vitro in a way that is independent of Est1 binding on more proximal portions of this stem-loop. Functional analyses of the RNA in vivo reveal that this distal element we call telomerase-stimulating structure (TeSS) must contain a bulged area in single stranded form and also show that Est1-dependent functions such as telomerase import or recruitment are not affected by TeSS. This study thus uncovers a new structural telomerase RNA element implicated in catalytic activity. Given previous evidence for TeSS elements in ciliate and mammalian RNAs, we speculate that this substructure is a conserved feature that is required for optimal telomerase holoenzyme function.