Abstract Cancer cells rely on the ribonucleoprotein enzyme telomerase to maintain their telomeres, which consist of tandem DNA repeats bound to protective protein factors collectively termed shelterin. Experimentally-induced telomere dysfunction in cancer cells, either through critical telomere shortening or disruption of shelterin binding, typically leads to telomere fusions, ultimately resulting in genome instability and cell death. For reasons that are not well understood, the mechanism of telomere fusion varies depending on the cause of telomere dysfunction. We have investigated telomere fusions caused by overexpression of mutant telomerases that add mutated telomeric repeats, thereby disrupting shelterin binding and inhibiting cancer cell proliferation. We previously showed that the effect of one such telomerase in human cancer cells is ATM dependent (Stohr BA and Blackburn EH, Cancer Research 68:5309–5317, 2008). Here, we have tested additional mutant telomerases that add either palindromic or non-palindromic telomeric repeats. We show that while all mutant telomeric sequences tested induce heterodicentric chromosome fusions, only palindromic telomeric repeats induce ATM-independent sister chromatid and isodicentric chromosome fusions in human cancer cells. Thus, the telomeric sequence itself influences the fate of telomeres that have become dysfunctional. These results implicate DNA strand annealing in an alternative telomere fusion pathway in human cells. The need to avoid genome instability caused by such fusions is one explanation for the characteristic lack of self-complementarity in naturally-occurring telomeric sequences. Finally, our results have significant implications for the translational application of mutant telomerases as a cancer therapeutic strategy. Citation Information: Cancer Res 2009;69(23 Suppl):B64.