The sequence requirements for in vivo telomere function in the fission yeast, Schizosaccharomyces pombe, have been investigated. A 258 bp tract of previously characterized cloned fission yeast terminal repeats adjacent to 800 bp of telomere-associated sequences is sufficient to seed new telomeres onto linearized ars-containing plasmids when introduced into cells. The resulting transformants contain unrearranged, acentric, linear episomes. Cloned telomeres, with and without telomere-associated sequences adjacent to the 258 bp terminal repeats, were utilized to introduce chromosome breaks at specific sites in a non-essential minichromosome. Truncated minichromosome derivatives were recovered containing the ura4 or ade6 gene adjacent to a newly formed telomere. These telomeres exert reversible position effects on the expression of the adjacent ura4 or ade6 genes.