Telomerase, the ribonucleoprotein enzyme that elongates telomeres, is repressed in normal human somatic cells but is reactivated during tumor progression. We report the cloning of a human gene, hEST2, that shares significant sequence similarity with the telomerase catalytic subunit genes of lower eukaryotes. hEST2 is expressed at high levels in primary tumors, cancer cell lines, and telomerase-positive tissues but is undetectable in telomerase-negative cell lines and differentiated telomerase-negative tissues. Moreover, the message is up-regulated concomitant with the activation of telomerase during the immortalization of cultured cells and down-regulated during in vitro cellular differentiation. Taken together, these observations suggest that the induction of hEST2 mRNA expression is required for the telomerase activation that occurs during cellular immortalization and tumor progression.