Ribonucleoprotein enzymes require dynamic conformations of their RNA constituents for regulated catalysis. Human telomerase employs a non-coding RNA (hTR) with a bipartite arrangement of domains-a template-containing core and a distal three-way junction (CR4/5) that stimulates catalysis through unknown means. Here, we show that telomerase activity unexpectedly depends upon the holoenzyme protein TCAB1, which in turn controls conformation of CR4/5. Cells lacking TCAB1 exhibit a marked reduction in telomerase catalysis without affecting enzyme assembly. Instead, TCAB1 inactivation causes unfolding of CR4/5 helices that are required for catalysis and for association with the telomerase reverse-transcriptase (TERT). CR4/5 mutations derived from patients with telomere biology disorders provoke defects in catalysis and TERT binding similar to TCAB1 inactivation. These findings reveal a conformational "activity switch" in human telomerase RNA controlling catalysis and TERT engagement. The identification of two discrete catalytic states for telomerase suggests an intramolecular means for controlling telomerase in cancers and progenitor cells.