Telomerase is a ribonucleoprotein (RNP) DNA polymerase involved in telomere synthesis. A short sequence within the telomerase RNA component provides a template for de novo addition of the G-rich strand of a telomeric simple sequence repeat onto chromosome termini. In vitro, telomerase can elongate single-stranded DNA primers processively: one primer can be extended by multiple rounds of template copying before product dissociation. Telomerase will incorporate dNTPs or ddNTPs and will elongate any G-rich, single-stranded primer DNA. In this report, we show that Tetrahymena telomerase was able to incorporate a ribonucleotide, rGTP, into product polynucleotide. Synthesis of the product [d(TT)r(GGGG)]n was processive, suggesting that the chimeric product remained associated with the enzyme both at the active site and at a second, previously characterized, template-independent product binding site. As predicted by this finding, RNA-containing oligonucleotides served as primers for elongation. More than 3 nt of RNA at a primer 3' end decreased the quantity of product synthesis but increased the affinity of the primer for telomerase. Thus, RNA-containing primers were effective as competitive inhibitors of DNA primer elongation by telomerase. These results support the possible evolutionary origin of telomerase as an RNA-dependent RNA polymerase.