Pluripotent stem cells (PSCs) express telomerase and have unlimited proliferative potential. To study telomerase activation during reprogramming, 3 classes of embryonic stem cell (ESC)-like clones were isolated from mouse fibroblasts containing a transgenic hTERT reporter. Class I expressed few pluripotency markers, whereas class II contained many, but not Oct4, Nanog, and Sox2. Neither class of cells differentiated efficiently. Class III cells, the fully reprogrammed induced PSCs (iPSCs), expressed all pluripotency markers, formed teratomas indistinguishable from those of mESCs, and underwent efficient osteogenic differentiation in vitro. Interestingly, whereas the endogenous mTERT gene expression was only moderately increased during reprogramming, the hTERT promoter was strongly activated in class II cells and was further elevated in class III cells. Treatment of class II cells with chemical inhibitors of MEKs and glycogen synthase kinase 3 resulted in their further reprogramming into class III cells, accompanied by a strong activation of hTERT promoter. In reprogrammed human cells, the endogenous telomerase level, although variable among different clones, was dramatically elevated. Only in cells with the highest telomerase were telomeres restored to the lengths in hESCs. Our data, for the first time, demonstrated that the hTERT promoter was strongly activated in discrete steps, revealing a critical difference in human and mouse cell reprogramming. Because telomere elongation is crucial for self-renewal of hPSCs and replicative aging of their differentiated progeny, these findings have important implications in the generation and applications of iPSCs.