Telomerase has been proposed as a selective target for cancer chemotherapy. We established a forward chemical genetics approach using a yeast strain with shortened telomere length. Since this strain rapidly enters cell senescence in the absence of active telomerase, compounds that induce selective growth defects against telomere-shortened yeast could be candidates for drugs acting on telomeres and telomerase. We screened our microbial products library and identified three structurally unrelated antibiotics, chrolactomycin, UCS1025A, and radicicol, as active compounds. Detailed analysis showed that chrolactomycin inhibited human telomerase in a cell-free assay as well as in a cellular assay. Long-term culture of cancer cells with chrolactomycin revealed population-doubling-dependent antiproliferative activity accompanied by telomere shortening. These results suggest that chrolactomycin is a telomerase inhibitor, and that the yeast-based assay is useful for discovering the small molecules acting on human telomerase.