Telomeres consist of short repeated sequences that are synthesized by telomerase, a ribonucleo-protein DNA polymerase. Telomerase activity is present in many tumours and not detected in many normal tissues. Telomere shortening in human and mouse tissues and primary cell cultures may be due to the absence of telomerase activity. To determine when telomerase is activated during tumour development and progression, we examined telomerase activity and expression of the recently cloned mouse telomerase RNA component (mTR) in two different transgenic mouse models of multi-stage tumorigenesis. These mouse models allow examination of many independent tumours from genetically identical individuals. These mice reproducibly develop pancreatic islet cell carcinoma and squamous cell carcinoma of the skin. In both carcinoma types, we detected telomerase activity only in late-stage tumours; in contrast, we found mTR levels were upregulated in the early preneoplastic stages, and further increased during progression. Surprisingly, mTR levels did not parallel the amount of telomerase activity detected and a subset of tumours lacked telomerase activity and yet expressed telomerase RNA. Regulation of telomerase activity may therefore be separable from expression of its RNA component. These results clearly demonstrate telomerase is activated in late stages of tumour progression, and show for the first time that the initial up regulation of telomerase RNA is an early event, concurrent with the hyperproliferation elicited by viral oncogenes.