Mice genetically deficient for the telomerase RNA (mTR) can be propagated for only a limited number of generations. In particular, mTR−/− mice of a mixed C57BL6/129Sv genetic background are infertile at the sixth generation and show serious hematopoietic defects. Here, we show that a percentage of mTR−/− embryos do not develop normally and fail to close the neural tube, preferentially at the forebrain and midbrain. The penetrance of this defect increases with the generation number, with 30% of the mTR−/− embryos from the fifth generation showing the phenotype. Moreover, mTR−/− kindreds in a pure C57BL6 background are only viable up to the fourth generation and also show defects in the closing of the neural tube. Cells derived from mTR−/− embryos that fail to close the neural tube have significantly shorter telomeres and decreased viability than their mTR−/− littermates with a closed neural tube, suggesting that the neural tube defect is a consequence of the loss of telomere function. The fact that the main defect detected in mTR−/− embryos is in the closing of the neural tube, suggests that this developmental process is among the most sensitive to telomere loss and chromosomal instability.