Human telomerase hTERC RNA serves as a template for the catalytic hTERT protein to synthesize telomere repeats at chromosome ends. We have recently shown that some patients with bone marrow failure syndromes are heterozygous carriers for hTERC or hTERT mutations. These sequence variations usually lead to a compromised telomerase function by haploinsufficiency. Here, we provide functional characterization of an additional 8 distinct hTERT sequence variants and 5 hTERC variants that have recently been identified in patients with dyskeratosis congenita (DC) or aplastic anemia (AA). Among the mutations, 2 are novel telomerase variants that were identified in our cohort of patients. Whereas most of the sequence variants modulate telomerase function by haploinsufficiency, 2 hTERC variants with sequence changes located within the template region appear to act in a dominant-negative fashion. Inherited telomerase gene mutations, therefore, operate by various mechanisms to shorten telomere lengths, leading to limited marrow stem cell reserve and renewal capacity in patients with hematologic disorders.