Telomerase appears to be an important factor for the control of cellular proliferation and tumorigenesis. Enzyme activity dramatically increases in almost all human tumors. The purpose of our study was to evaluate the role of telomerase activity as a marker for bladder cancer diagnosis and follow-up. By using the PCR-ELISA based on the TRAP (telomerase repeat amplification protocol) method, telomerase activity of bladder tumors (n = 77), normal-appearing adjacent tissues (n = 21) and bladder washings (n = 37) were analyzed. Telomerase activity was detected in 87% (67/77) of cancer tissues and in 38% (8/21) of normal-appearing adjacent tissues. However, the levels of enzyme activity were significantly higher in cancer tissues than in normal-appearing adjacent tissues (p < 0.05). Telomerase activity in bladder cancer tissues was not correlated to the tumor stage or grade. During a 26 months follow-up period, disease progression occurred in 66.7% of patients with invasive tumors where telomerase activity of the normal-appearing adjacent tissue was detectable, as compared to only 14.3% for patients who showed undetectable telomerase activity in adjacent, normal-appearing tissues (p = 0.094). When telomerase activity of bladder washing fluid was compared with its corresponding tumors, sensitivity of detection was 81% and specificity was 75%. In contrast, urine cytology only yielded a sensitivity of 31% in the detection of cancer. The detection ability between telomerase activity measurement in washing fluid and cytological examination had a trend toward the telomerase measurement identifying more cancer cases than the cytologic examination (p = 0.07). In conclusion, telomerase activity is present in early-stage bladder cancer and is a potential molecular marker for bladder tumors diagnosis. The expression of telomerase activity in normal-appearing mucosa adjacent to bladder tumor is probably an indicator of disease progression. Using the telomerase activity to detect exfoliated cells in bladder washing fluids could be a useful method in adjunct to urine cytology and cystoscopy in establishing the diagnosis and follow-up of bladder cancer.