RATIONALE Germline mutations in the enzyme telomerase cause telomere shortening, and have their most common clinical manifestation in age-related lung disease that manifests as idiopathic pulmonary fibrosis. Short telomeres are also a unique heritable trait that is acquired with age. OBJECTIVES We sought to understand the mechanisms by which telomerase deficiency contributes to lung disease. METHODS We studied telomerase null mice with short telomeres. MEASUREMENTS AND MAIN RESULTS Although they have no baseline histologic defects, when mice with short telomeres are exposed to chronic cigarette smoke, in contrast with controls, they develop emphysematous air space enlargement. The emphysema susceptibility did not depend on circulating cell genotype, because mice with short telomeres developed emphysema even when transplanted with wild-type bone marrow. In lung epithelium, cigarette smoke exposure caused additive DNA damage to telomere dysfunction, which limited their proliferative recovery, and coincided with a failure to down-regulate p21, a mediator of cellular senescence, and we show here, a determinant of alveolar epithelial cell cycle progression. We also report early onset of emphysema, in addition to pulmonary fibrosis, in a family with a germline deletion in the Box H domain of the RNA component of telomerase. CONCLUSIONS Our data indicate that short telomeres lower the threshold of cigarette smoke-induced damage, and implicate telomere length as a genetic susceptibility factor in emphysema, potentially contributing to its age-related onset in humans.