Telomeres protect chromosome ends from end-to-end fusion and degradation. Loss of telomere function causes cell-cycle arrest or cell death. Autosomal dominant dyskeratosis congenita (AD DC), a rare inherited bone marrow failure syndrome, is caused by mutations in TERC, the RNA component of telomerase. Here, we studied the telomere dynamics over three generations in a 32-member extended family with AD DC due to a TERC gene deletion. Our analysis shows that peripheral blood cells from family members haploinsufficient for TERC have very short telomeres. Telomeres are equally short in all individuals carrying the TERC gene deletion irrespective of their age. Chromosome-specific telomere analysis distinguishing the parental origin of telomeres showed that in gene deletion carriers, paternal and maternal telomeres are similarly short and similar in length to those of the affected parent. In children of affected parents who have normal TERC genes, parental telomeres are again similar in length, but two generations appear to be necessary to fully restore normal telomere length. These results are consistent with a model in which telomerase preferentially acts on the shortest telomeres. When TERC is limiting, this preference leads to the accelerated shortening of longer telomeres. The limited amount of active telomerase in TERC RNA haploinsufficiency may not be able to maintain the minimal length of the increasing number of short telomeres. Thus, the number of cells with excessively short telomeres and the degree of residual telomerase activity may determine the onset of disease in patients with AD DC. © 2005 by The National Academy of Sciences of the USA.