In human cells, transfection of telomeric T2AG3 repeats induces the formation of functional telomeres at previously interstitial sites. We report that telomere formation has stringent sequence requirements. While (T2AG3)n telomere seeds formed telomeres in approximately 70% of the transfected cells, five T2AG3-related heterologous telomeric DNAs seeded new telomeres in < 5% of the transfectants. Telomere formation did not correlate with the ability of human telomerase to elongate telomeric sequences in vitro. Homologous recombination is probably also not involved because a (T2AG3)n telomere seed with nontelomeric DNA at 160-bp intervals formed new telomeres frequently. Instead, the sequence dependence of telomere formation matched the in vitro binding requirements for the mammalian T2AG3 repeat binding factor (TRF). Human TRF failed to bind ineffective heterologous telomere seeds and had a 4-fold lower affinity for (T2AG5)2T2AG3 repeats, which seeded telomeres with reduced frequency. The results suggest that telomere seeds interact with TRF and predict that mammalian artificial chromosomes will require wild-type telomeric repeats at, or near, their termini.