To examine the role of telomerase in normal and neoplastic growth, the telomerase RNA component (mTR) was deleted from the mouse germline. mTR^−/− mice lacked detectable telomerase activity yet were viable for the six generations analyzed. Telomerase-deficient cells could be immortalized in culture, transformed by viral oncogenes, and generated tumors in nude mice following transformation. Telomeres were shown to shorten at a rate of 4.8 ± 2.4 kb per mTR^−/− generation. Cells from the fourth mTR^−/− generation onward possessed chromosome ends lacking detectable telomere repeats, aneuploidy, and chromosomal abnormalities, including end-to-end fusions. These results indicate that telomerase is essential for telomere length maintenance but is not required for establishment of cell lines, oncogenic transformation, or tumor formation in mice.