Cell division in the absence of telomerase leads to telomere shortening that can activate checkpoint responses and impair chromosomal stability. The absence of telomerase in primary human cells and its near universal reactivation in human cancers has highlighted the importance of telomere shortening and telomerase reactivation during tumor development. Data from telomerase-deficient mouse models of cancer have indicated that telomere shortening can exert profoundly different influences on cell fates in developing cancers, limiting tumorigenesis by enhancing cell death or facilitating carcinogenesis by compromising chromosomal stability. These alternate fates depend on the integrity of the p53 pathway and on cell type.