Telomeres containing vertebrate-type DNA repeats can be stably maintained in Saccharomyces cerevisiae cells. We show here that telomerase is required for growth of yeast cells containing these vertebrate-type telomeres. When present at the chromosome termini, these heterologous repeats elicit a DNA damage response and a certain deprotection of telomeres. The data also show that these phenotypes are due only to the terminal localization of the vertebrate repeats because if they are sandwiched between native yeast repeats, no phenotype is observed. Indeed and quite surprisingly, in this latter situation, telomeres are of virtually normal lengths, despite the presence of up to 50% of heterologous repeats. Furthermore, the presence of the distal vertebrate-type repeats can cause increased problems of the replication fork. These results show that in budding yeast the integrity of the 3' overhang is required for proper termination of telomere replication as well as protection.