Dyskeratosis congenita (DC) is the first human disease whose pathogenesis has been directly linked to an impairment of telomere maintenance. Telomeres protect chromosome ends from end to end fusion and degradation. Loss of telomere function causes cell cycle arrest or cell death. Telomeres are maintained by the telomerase ribonucloprotein complex whose integral RNA component, the telomerase RNA or TERC RNA, contains the sequences that act as a template for the synthesis of telomeric repeats. Autosomal dominant DC (AD DC), a rare inherited bone marrow failure syndrome, is caused by mutations in TERC, the RNA component of telomerase. Patients with AD DC have very short telomeres. Haploinsufficiency has been proposed to be the mechanism for telomere shortening in TERC gene mutation carriers. Individuals with AD DC not only inherited the TERC gene mutation but also the shortened telomeres from the affected parent. Here we studied the telomere dynamics over 3 generations in a 32-member extended family with AD DC due to a TERC gene deletion. The investigation of telomere length within a single family has the advantage that the molecular lesion responsible for telomere shortening is uniform and that the contribution of other genetic components influencing telomere length is similar. Our analysis shows that peripheral blood cells from family members haploinsufficient for TERC have very short telomeres (6.68 kb, range 5.53–8.45, SD 1.13, normal controls: 9.15 kb rage 8.56–10.77, SD 1.22). In contrast to normal controls, whose telomere lengths shorten with age, the telomere lengths in all individuals carrying the TERC gene deletion are equally short irrespective of their age. To study the inheritance of short telomeres and the effect of TERC haploinsufficiency on specific telomere lengths in affected individuals and their relatives we carried out Q-FISH analysis using polymorphic subtelomeric probes on chromosomes 11p, 7p, and 1p, which are able to distinguish the parental origin of telomeres in this family. Our analysis showed that in children of affected parents who have inherited the gene deletion, paternal and maternal telomeres are similarly short, and similar in length to those of the affected parent. In children of affected parents who have normal TERC genes paternal and maternal telomeres are again similar in length, and similar to those of the unaffected parent. These results are consistent with a model in which telomerase preferentially acts on the shortest telomeres. When TERC is limiting this leads to the accelerated shortening of longer telomeres and the accumulation of short telomeres. The limited amount of active telomerase in TERC RNA haploinsufficiency may not be able to maintain the minimal length of the increasing number of short telomeres. Thus, the number of critically short telomeres and the degree of residual telomerase activity may determine the onset of disease in patients with DC.