Telomerase transgenics are an important tool to assess the role of telomerase in cancer, as well as to evaluate the potential use of telomerase for gene therapy of age-associated diseases. Here, we have targeted the expression of the catalytic component of mouse telomerase, mTERT, to basal keratinocytes using the bovine keratin 5 promoter. These telomerase-transgenic mice are viable and show histologically normal stratified epithelia with high levels of telomerase activity and normal telomere length. Interestingly, the epidermis of these mice is highly responsive to the mitogenic effects of phorbol esters, and it is more susceptible than that of wild-type littermates to the development skin tumors upon chemical carcinogenesis. The epidermis of telomerase-transgenic mice also shows an increased wound-healing rate compared with wild-type littermates. These results suggest that, contrary to the general assumption, telomerase actively promotes proliferation in cells that have sufficiently long telomeres and unravel potential risks of gene therapy for age-associated diseases based on telomerase upregulation.