We have measured the processivity of telomeric DNA extension by Euplotes aediculatus telomerase at various concentrations of the nucleotide substrates dGTP and dTTP, The maximum processivity (similar to 3 repeats) was observed at similar to 100 mu M of each dNTP, Processivity decreased as the dNTP concentrations were reduced and, surprisingly, as the concentration of dGTP was increased. Also, the characteristic banding pattern generated by telomerase extension of DNA primers shifted in response to changes in dGTP concentration, One pattern with 8 nt periodicity was predominant at dGTP concentrations less than or equal to 16 mu M, while at greater than or equal to 250 mu M an 8 nt repeat pattern out-of-phase with the first was observed; at intermediate concentrations the two patterns coexisted, We propose that two different segments of the RNA subunit can serve as the template for repeat synthesis; nt 42-49 at low dGTP concentrations and nt 36-43 at high dGTP concentrations, An alternative model for the low dGTP pattern involves an internal pause site but no pause at the end of the template and is, therefore, considered less likely, Because the effects of dGTP on processivity and banding pattern appear to be distinct from nucleotide binding in the polymerase active site, we propose a second dGTP binding site involved in template selection and processivity.