Telomerase deficiency leads to a progressive loss of telomeric DNA that eventually triggers cell apoptosis in human primary cells during prolonged growth in culture. Rare survivors can maintain telomere length through either activation of telomerase or recombination-based telomere lengthening, and thus proliferate indefinitely. We have explored the possibility that telomeres may be maintained through telomere sister chromatid exchange (T-SCE) in murine telomere reverse transcriptase-deficient (mTert-/-) splenocytes and ES cells. Because telomerase deficiency leads to gradual loss of telomeric DNA in mTert-/- splenocytes and ES cells and eventually to chromosomes with telomere signal-free ends (SFEs), we examined these cell types for evidence of sister chromatid exchange at telomeres, and observed an increase in T-SCEs only in a subset of mTert-/- splenocytes or ES cells that possessed multiple SFEs. Furthermore, T-SCEs were more often detected in ES cells than in splenocytes that harbored a similar frequency of SFEs. In mTert heterozygous (mTert+/-) ES cells or splenocytes, which are known to exhibit a decrease in average telomere length but no SFEs, no increase in T-SCE was observed. In addition to T-SCE, other genomic rearrangements (i.e., SCE) were also significantly increased in mTert-/- ES cells possessing critically short telomeres, but not in splenocytes. Our results suggest that animals and cell culture differ in their ability to carry out genomic rearrangements as a means of maintaining telomere integrity when telomeres become critically shortened.