Dyskeratosis congenita (DC) is an inherited bone marrow (BM) failure syndrome associated with mutations in telomerase genes and the acquisition of shortened telomeres in blood cells. To investigate the basis of the compromised hematopoiesis seen in DC, we analyzed cells from granulocyte colony-stimulating factor mobilized peripheral blood (mPB) collections from 5 members of a family with autosomal dominant DC with a hTERC mutation. Premobilization BM samples were hypocellular, and percentages of CD34⁺ cells in marrow and mPB collections were significantly below values for age-matched controls in 4 DC subjects. Directly clonogenic cells, although present at normal frequencies within the CD34⁺ subset, were therefore absolutely decreased. In contrast, even the frequency of long-term culture-initiating cells within the CD34⁺ DC mPB cells was decreased, and the telomere lengths of these cells were also markedly reduced. Nevertheless, the different lineages of mature cells were produced in normal numbers in vitro. These results suggest that marrow failure in DC is caused by a reduction in the ability of hematopoietic stem cells to sustain their numbers due to telomere impairment rather than a qualitative defect in their commitment to specific lineages or in the ability of their lineage-restricted progeny to execute normal differentiation programs.