Fanconi anaemia (FA) is an autosomal recessive and X-linked disease characterized by severe genetic instability and increased incidence of cancer. One explanation for this instability may be the cellular hypersensitivity to oxidative stress leading to chromosomal breaks. This study explored the possible oxidative damage to telomeres of FA lymphocyte cell line, HSC536/N, and its possible effect on telomere function. We postulated that combination of oxidative damage with overexpression of telomerase may provide a possible model for malignant transformation in FA. The cells were grown in the presence of telomerase inhibitor and exposed for 1 month to H(2)O(2) combined with various antioxidants. This exposure caused shortening of telomere length and damage to the telomere single stranded overhang, which was prevented by several oxidants. This shortening was associated with development of severe telomere dysfunction. Control cells did not exhibit this sensitivity to H(2)O(2). Telomere dysfunction did not evoke damage response in FA cells, in contrast to normal P53 upregulation in control cells. Reconstitution of telomerase activity protected FA telomeres from further oxidative damage. These results suggest a scenario in which oxidative stress causes telomere shortening and ensuing telomere dysfunction may form the basis for malignant transformation in FA cells. Upregulation of telomerase activity in sporadic FA cells may perpetuate that process, thus explaining the malignant character of FA cells in vivo.