A gel mobility shift assay was developed to examine recognition of yeast telomeres by telomerase. An RNase-sensitive G-rich strand-specific binding activity can be detected in partially purified yeast telomerase fractions. The binding activity was attributed to telomerase, because it co-purifies with TLC1 RNA and telomerase activity over three different chromatographic steps and because the complex co-migrates with TLC1 RNA when subjected to electrophoresis through native gels. Analysis of the binding specificity of yeast telomerase indicates that it recognizes the G-rich strand of yeast telomeres with high affinity and specificity. The K d for the interaction is approximately 3 nM. Single-stranded G-rich telomeres from other species, such as human and Tetrahymena, though capable of being extended by yeast telomerase in polymerization assays at high concentrations, bind the enzyme with at least 100-fold lower affinities. The ability of a sequence to be bound tightly by yeast telomerase in vitro correlates with its ability to seed telomere formation in vivo. The implications of these findings for regulation of telomerase activity are discussed.