Telomere shortening and lack of telomerase activity have been implicated in cellular senescence in human fibroblasts. Expression of the human telomerase (hTERT) gene in sheep fibroblasts reconstitutes telomerase activity and extends their lifespan. However, telomere length is not maintained in all cell lines, even though in vitro telomerase activity is restored in all of them. Cell lines expressing higher levels of hTERT mRNA do not exhibit telomere erosion or genomic instability. By contrast, fibroblasts expressing lower levels of hTERT do exhibit telomere shortening, although the telomeres eventually stabilize at a shorter length. The shorter telomere lengths and the extent of karyotypic abnormalities are both functions of hTERT expression level. We conclude that telomerase activity is required to bypass senescence but is not sufficient to prevent telomere erosion and genomic instability at lower levels of expression.