Intraductal papillary mucinous neoplasm (IPMN) of the pancreas has been increasingly identified as a precursor to infiltrating ductal adenocarcinoma. Telomerase activation in response to telomere crisis followed by telomere shortening is thought to be a crucial event in the development of most human cancers. The aim of this study was to determine when this event occurs in the context of histologically defined IPMN progression. We analyzed telomerase expression in 68 IPMN samples and assessed telomere length by quantitative fluorescence in situ hybridization in samples taken from 17 sequential IPMN patients that included 37 individual loci. Samples from pancreatic ductal adenocarcinomas (PDACs, n=15) and chronic pancreatitis patients (n=10) were also examined. Telomeres were significantly shortened in 36 (97.3%) of 37 IPMN loci, with average telomere length decreasing with IPMN progression. Notably, even adenoma IPMNs demonstrated a 50% reduction of telomere length in 7 of 14 foci examined. Marked telomere shortening was observed from the in situ IPMN carcinoma stage (P<0.001; vs borderline IPMNs) through the invasive stage, although telomerase had been activated, indicating that telomeres had shortened to a critical length by this histological grade. Up-regulated human telomerase reverse transcriptase expression was detectable and increased gradually with cancer development and was primarily observed at the borderline IPMN stage and then in more advanced histopathologies. Progressive telomere shortening predominantly occurs during early IPMNs carcinogenesis before telomerase activation and progression from borderline to carcinoma in situ IPMNs is the critical stage of IPMNs carcinogenesis at which telomere dysfunction occurs.