Mutation of the telomeric repeat sequence has severe cellular consequences in a variety of systems. A Tetrahymena thermophila telomerase template mutant, ter1-43AA, displays an acute mitotic chromosome segregation defect. In the study described here we investigated the molecular basis for this lethality. Although cloned ter1-43AA macronuclear telomeres had long tracts of wild-type G4T2 repeats, they were capped by a mixture of G4T3 repeats, shown previously to be non-lethal, and G4T4 repeats, the telomeric sequence normally found in hypotrichous ciliates such as Oxytricha. To test further the functionality of the G4T4 repeat sequence in T. thermophila, we devised a new template mutation, ter1-44+AA, that resulted in more uniform synthesis of this sequence at telomere caps in vivo. The ter1-44+AA mutant displayed the most severe mitotic defect reported to date, with up to 85% of the population having micronuclei in anaphase, providing firm evidence that the hypotrich repeat sequence is not functional in Tetrahymena. Surprisingly, in spite of the telomeric sequence mutation, neither the ter1-43AA nor ter1-44+AA mutant displayed any significant loss of telomere length regulation. These results demonstrate that loss of telomere cap integrity, rather than length regulation, leads to the anaphase defect.