Telomerase is an enzyme that elongates telomeric repeats, the specialized structures at the ends of chromosomes that provide genomic stability and compensate for the physiologic process of telomere shortening. It has been implicated in cellular senescence, immortalization, and carcinogenesis. Over 85% of human tumours, and 95% of nonmelanocytic skin cancers, show telomerase activity, in contrast to the corresponding normal tissues. This suggests that telomerase activity may play an important role in carcinogenesis. Recent evidence shows that telomerase is active not only in embryonal and germ line tissues, but also in some normal tissues. In the skin, this activity has been traced to the stem-cell-bearing epidermal basal cell layer, possibly reflecting the presence of telomerase-competent stem cells. These findings require a reconsideration of our interpretation of telomerase activity in tumours of the skin and other tissues. As a causal relationship linking telomerase activity and cancer has yet not been demonstrated, some caution is warranted.