Loss of telomeric repeats has been causally linked to replicative senescence and aging in human cells. In contrast to normal somatic cells, which are telomerase-negative, hematopoietic stem cells have low levels of telomerase, which can be transiently upregulated upon cytokine stimulation. To examine whether ectopic expression of telomerase can overcome telomere erosion in hematopoietic progenitor cells, we overexpressed telomerase in CD34+ and AC133+ cord blood (CB) cells using retroviral vectors containing hTERT, the catalytic component of telomerase. Although the hTERT-transduced CB cells exhibited significantly elevated telomerase activity (approximately 10-fold), the mean telomere length was only increased up to 600 bp, which was in contrast to hTERT-transduced fibroblast cells gaining more than 2-kb telomeric repeats. Moreover, ectopic telomerase activity did not prevent overall telomere shortening, which was in the range of 1.3 kb in serum-free expansion culture. We also blocked endogenous telomerase activity by ectopic expression of dominant-negative hTERT. Whereas CB cells with absent telomerase activity showed reduced absolute numbers of colony-forming cells, we observed increased rates only for burst-forming units erythroid when the enzyme was overexpressed. These results suggest that telomere shortening in human hematopoietic progenitor cells cannot be compensated by increased levels of telomerase alone and is likely to be dependent on other factors, such as telomere binding proteins. Furthermore, telomerase function seems to be directly associated with the proliferative capacity of stem cells and may exert an additional role in lineage differentiation.