Telomerase elongates chromosome ends by addition of telomeric DNA repeats. The telomerase ribonucleoprotein can copy only a short template sequence within the telomerase RNA subunit. Here, we identify a region of telomerase RNA that is necessary for both correct 5' template boundary definition and high affinity telomerase reverse transcriptase (TERT) interaction. We also demonstrate that TERT mutants in the RNA binding domain compromise both 5' boundary definition and RNA binding. Our results indicate that sequence-specific interaction of a telomerase RNA element with the TERT RNA binding domain, not the active site motifs, defines the template boundary.