The Protection of telomeres 1 (POT1) protein is a single-stranded telomere binding protein that is essential for proper maintenance of telomere length. Disruption of POT1 function leads to chromosome instability and loss of cellular viability. Here, we show that targeted deletion of the mouse Pot1b gene results in increased apoptosis in highly proliferative tissues. In the setting of telomerase haploinsufficiency, loss of Pot1b results in depletion of germ cells and complete bone marrow failure due to increased apoptosis, culminating in premature death. Pot1b(-/-) mTR(+/-) hematopoietic progenitor and stem cells display markedly reduced survival potential in vitro. Accelerated telomere shortening, increased G overhang and elevated number of chromosome end-to-end fusions that initiate an ATR-dependent DNA damage response were also observed. These results indicate an essential role for Pot1b in the maintenance of genome integrity and the long-term viability of proliferative tissues in the setting of telomerase deficiency. Interestingly, these phenotypes closely resemble those found in the human disease dyskeratosis congenita (DC), an inherited syndrome characterized by bone marrow failure, hyperpigmentation, and nail dystrophy. We anticipate that this mouse will serve as a useful model to further understand the pathophysiology of DC.