Abstract: Telomerase is a ribonucleoprotein reverse transcriptase responsible for the maintenance of one strand of the telomere terminal repeats. It consists minimally of a catalytic protein component (TERT) and an RNA subunit that provides the template. Compared with prototypical reverse transcriptases, telomerase is unique in possessing a DNA binding domain (anchor site) that is distinct from the catalytic site. Yeast TERT mutants bearing deletion or point mutations in an N-terminal domain (known as N-GQ) were found to be selectively impaired in extending primers that form short hybrids with telomerase RNA. The mutants also suffered a significant loss of repeat addition processivity but displayed an enhancement in nucleotide addition processivity. Furthermore, the mutants manifested altered primer utilization properties for oligonucleotides containing non-telomeric residues in the 5'-region. Cross-linking studies indicate that the N-GQ domain physically contacts the 5'-region of the DNA substrate in the context of a telomerase-telomere complex. Together, these results implicate the N-GQ domain of TERT as a physical and functional constituent of the telomerase anchor site. Coupled with previous genetic analysis, our data confirm that anchor site interaction is indeed important for telomerase function in vivo.