The ribonucleoprotein enzyme telomerase synthesizes telomeric DNA by copying a template sequence in the telomerase RNA. We studied the functional roles of specific residues in the Tetrahymena telomerase RNA template region. Unexpectedly, mutation of certain templating residues caused dramatic effects on specific aspects of the enzyme reaction, including loss of enzymatic fidelity and premature product dissociation. None of these fundamental changes in enzymatic action are explainable by altered base-pairing between the telomerase RNA and DNA substrate. These influences of specific template bases of the telomerase RNA on enzymatic properties of telomerase provide evidence for critical roles of these RNA residues in two active site functions--fidelity and DNA substrate/enzyme interaction.