BIBR1532 is a highly specific telomerase inhibitor, although the molecular basis for inhibition is unknown. Here we present the crystal structure of BIBR1532 bound to Tribolium castaneum catalytic subunit of telomerase (tcTERT). BIBR1532 binds to a conserved hydrophobic pocket (FVYL motif) on the outer surface of the thumb domain. The FVYL motif is near TRBD residues that bind the activation domain (CR4/5) of hTER. RNA binding assays show that the human TERT (hTERT) thumb domain binds the P6.1 stem loop of CR4/5 in vitro. hTERT mutations of the FVYL pocket alter wild-type CR4/5 binding and cause telomere attrition in cells. Furthermore, the hTERT FVYL mutations V1025F, N1028H, and V1090M are implicated in dyskeratosis congenita and aplastic anemia, further supporting the biological and clinical relevance of this novel motif. We propose that CR4/5 contacts with the telomerase thumb domain contribute to telomerase ribonucleoprotein assembly and promote enzymatic activity.