The ends of eukaryotic chromosomes, known as telomeres, play crucial roles as guardians of genome stability and tumor suppressors. Telomeric DNA is maintained by the ribonucleoprotein enzyme telomerase. Most normal human somatic cells express only very low levels of telomerase and telomeres shorten with continuous cell division cycles. Ultimately, short telomeres activate a DNA damage response that leads to a permanent cell cycle arrest or apoptosis. Reactivation of telomerase is a key requisite for human cancer cells to attain unlimited proliferation potential. The key questions that need to be tackled in the telomere field are (1) how telomeres protect from DNA repair activities, (2) how recruitment and regulation of telomerase is mediated by telomere structure, (3) how cell cycle arrest occurs upon telomere shortening, and (4) how telomeres regulate their heterochromatic state. In all four areas, important progress is expected in the near future. We recently made the unexpected discovery that telomeres are transcribed into TElomeric Repeat containing RNA (TERRA) and that this RNA is an integral part of telomeric heterochromatin. Our working hypothesis is that the telomere is an RNA-dependent machine, and that several if not most of its crucial functions are regulated by TERRA. In this proposal we will explore TERRA functions, by elucidating its biogenesis, by identifying its protein partners and by genetic manipulation of the expression of TERRA and TERRA binding proteins. This work should provide fundamental insight into how our chromosome ends function. The gained knowledge may also provide novel avenues on how to manipulate telomere function and dysfunction in cancer cells and other diseased tissue.