We have found abundant telomere-specific terminal transferase activity in crude macronuclear extracts from vegetatively growing cells of the hypotrichous ciliate Oxytricha nova. This activity adds two to seven tandem repeats of the sequence GGGGTTTT (the Oxytricha telomeric repeat) to the 3' end of oligonucleotide primers ending in repeats of G4T4 and always adds the repeats in the proper phase. The activity requires the presence of micromolar amounts of dGTP and dTTP as well as single-stranded oligomer primers ending 3' with repeats of the Oxytricha telomeric sequence. A nuclease activity is present in the extracts which is closely balanced with telomere terminal transferase activity. We propose a simple model for replication of the ends of linear DNA molecules based on the telomere terminal transferase.