Telomerase is crucial for human carcinogenesis. The limiting component of telomerase activity is telomerase reverse transcriptase (hTERT), undetectable in differentiated somatic cells but present in most tumor cells. There is evidence that hTERT transcription is shut down by a repressor in normal cells, but the mechanisms that turn on or maintain expression in tumor cells are not understood. To identify cis-acting regulatory elements, we scanned the hTERT gene for nuclease sensitive sites. In tumor cells and in in vitro transformed fibroblasts that contain hTERT mRNA, we detected a pattern of nuclease-sensitive sites in the second intron different from that in normal fibroblasts. To test whether the chromatin state characterized by the increased nuclease sensitivity plays a role in tumor-specific hTERT expression, we used a telomerase-positive breast carcinoma line, 21NT. Introduction of a normal chromosome 3 into these cells is known to down-regulate hTERT expression, probably through transcriptional silencing. 21NT cells displayed a similar pattern of micrococcal nuclease (MNase) sensitivity to other telomerase-positive lines, whereas the hTERT chromatin of the chromosome 3-hybrids resembled that of normal fibroblasts. In segregants that had lost the normal chromosome 3, the MNase sensitivity pattern characteristic of telomerase-positive cells was restored, and some (but not all) re-expressed the hTERT gene. The simplest model compatible with these results, and with data on the mapping of an hTERT repressor on chromosome 3, is that hTERT expression in tumor cells depends on an open state of intron 2-chromatin. We propose that, during the development of the breast carcinoma from which the 21NT cell line was derived, loss of function of this repressor led to chromatin remodeling necessary (but probably not sufficient) for expression of the hTERT gene. An improved understanding of the precise mechanism of hTERT dysregulation in human cancer may well find applications in the development of antitelomerase cancer therapy.