Deletion of the telomerase catalytic subunit gene trt1(+) in Schizosaccharomyces pombe results in death for the majority of cells, but a subpopulation survives. Here it is shown that most survivors have circularized all of their chromosomes, whereas a smaller number maintain their telomeres presumably through recombination. When the telomeric DNA-binding gene taz1(+) is also deleted, trt1(-) taz1(-) survivors use the recombinational mode more frequently. Moreover, the massive elongation of telomeres in taz1(-) cells is absent in the double mutant. Thus, Taz1p appears to regulate telomeric recombination as well as telomerase activity in fission yeast.