In addition to conferring an indefinite replicative life span, telomerase renders p16(-) human mammary epithelial cells (HMEC) resistant to growth arrest by TGFbeta or by loss of EGF or insulin signaling. In contrast to earlier reports, we recently found that growth factor signaling was not directly affected by telomerase expression. Rather, short dysfunctional or near-dysfunctional telomeres in proliferating telomerase(-) HMEC sensitized the cells to p53-dependent signals for growth arrest. We showed that during serial passage and before any signs of replicative senescence, HMEC lacking telomerase experience enhanced p53 stability and DNA damage signaling, as determined by increased phosphorylation on p53-Ser15 and Chk2-Thr68, and formation of 53BP1/phosphorylated histone H2AX foci at chromosome ends. This heightened activity of the p53 pathway enhanced the efficiency with which cells arrested growth in response to TGFbeta or to EGF or insulin withdrawal, and was abolished by ectopic expression of hTERT, the catalytic subunit of telomerase. Telomerase elongated short telomeres, thereby reducing the basal level of activated p53 and raising cellular tolerance for other p53-dependent signals, including those emanating from non-genotoxic sources. These findings explain a number of observed effects of telomerase expression on cell growth and survival without postulating additional functions for telomerase.