Telomerase and telomeres are important for indefinite replication of stem cells. Recently, telomeres of somatic cells were found to be reprogrammed to elongate in induced pluripotent stem cells (iPSCs). The role of telomeres in developmental pluripotency in vivo of embryonic stem cells (ESCs) or iPSCs, however, has not been directly addressed. We show that ESCs with long telomeres exhibit authentic developmental pluripotency, as evidenced by generation of complete ESC pups as well as germline-competent chimeras, the most stringent tests available in rodents. ESCs with short telomeres show reduced teratoma formation and chimera production, and fail to generate complete ESC pups. Telomere lengths are highly correlated (r> 0.8) with the developmental pluripotency of ESCs. Short telomeres decrease the proliferative rate or capacity of ESCs, alter the expression of genes related to telomere epigenetics, down-regulate genes important for embryogenesis and disrupt germ cell differentiation. Moreover, iPSCs with longer telomeres generate chimeras with higher efficiency than those with short telomeres. Our data show that functional telomeres are essential for the developmental pluripotency of ESCs/iPSCs and suggest that telomere length may provide a valuable marker to evaluate stem cell pluripotency, particularly when the stringent tests are not feasible.