The reverse transcriptase telomerase copies an internal RNA template to synthesize telomeric simple-sequence repeats. In the cellular context, telomerase must elongate its few intended substrates (authentic chromosome ends) without spurious activity on other potential substrates (chromosome ends created by damage, repair, or recombination). Many mechanisms have been proposed to account for the biological substrate specificity of telomerase, with most models focusing on protein-protein interactions between telomerase and telomeric chromatin. Telomerase activity assays testing the elongation of model oligonucleotide substrates have revealed that in addition to hybridization with the RNA template, optimal DNA substrates also engage telomerase protein-based interaction sites. The physiological significance of these non-template interaction sites has not been established. We used in vivo reconstitution to assemble telomerase enzymes with variant telomerase reverse transcriptase proteins. Several telomerase enzyme variants retained a wild-type level of catalytic function in vitro when assayed using an artificial sequence substrate but exhibited reduced activity on a more physiological telomeric-sequence substrate. Telomerases that demonstrated this defect in telomeric substrate usage in vitro also failed to support telomere length maintenance in vivo. Our findings suggest that non-template interactions of the telomerase ribonucleoprotein with telomeric DNA play a critical role in supporting telomerase function on its appropriate cellular substrates.