The RNA component of telomerase (telomerase RNA; TER) varies substantially both in sequence composition and size (from approximately 150 nucleotides [nt] to >1500 nt) across species. This dramatic divergence has hampered the identification of TER genes and a large-scale comparative analysis of TER sequences and structures among distantly related species. To identify by phylogenetic analysis conserved sequences and structural features of TER that are of general importance, it is essential to obtain TER sequences from evolutionarily distant groups of species, providing enough conservation within each group and enough variation among the groups. To this end, we identified TER genes in several yeast species with relatively large (>20 base pairs) and nonvariant telomeric repeats, mostly from the genus Candida. Interestingly, several of the TERs reported here are longer than all other yeast TERs known to date. Within these TERs, we predicted a pseudoknot containing U-A.U base triples (conserved in vertebrates, budding yeasts, and ciliates) and a three-way junction element (conserved in vertebrates and budding yeasts). In addition, we identified a novel conserved sequence (CS2a) predicted to reside within an internal-loop structure, in all the budding yeast TERs examined. CS2a is located near the Est1p-binding bulge-stem previously identified in Saccharomyces cerevisiae. Mutational analyses in both budding yeasts S. cerevisiae and Kluyveromyces lactis demonstrate that CS2a is essential for in vivo telomerase function. The comparative and mutational analyses of conserved TER elements reported here provide novel insights into the structure and function of the telomerase ribonucleoprotein complex.