Telomeric regions are known to be transcribed in several organisms. Although originally reported to be transcribed from all chromosomes with enrichment near the inactive X of female cells, we show that telomeric RNAs in fact are enriched on both sex chromosomes of the mouse in a developmentally specific manner. In female stem cells, both active Xs are marked by the RNAs. In male stem cells, both the X and the Y accumulate telomeric RNA. Distribution of telomeric RNAs changes during cell differentiation, after which they associate only with the heterochromatic sex chromosomes of each sex. FISH mapping suggests that accumulated telomeric RNAs localize at the distal telomeric end. Interestingly, telomeric expression changes in cancer and during cellular stress. Furthermore, RNA accumulation increases in Dicer-deficient stem cells, suggesting direct or indirect links to RNAi. We propose that telomeric RNAs are tied to cell differentiation and may be used to mark pluripotency and disease.