Although it is clear that telomerase expression is crucial for the maintenance of telomere homeostasis, there is increasing evidence that the TERT protein can have physiological roles that are independent of this central function. To further examine the role of telomerase during vertebrate development, the zebrafish telomerase reverse transcriptase (zTERT) was functionally characterized. Upon zTERT knockdown, zebrafish embryos show reduced telomerase activity and are viable, but develop pancytopenia resulting from aberrant hematopoiesis. The blood cell counts in TERT-depleted zebrafish embryos are markedly decreased and hematopoietic cell differentiation is impaired, whereas other somatic lineages remain morphologically unaffected. Although both primitive and definitive hematopoiesis is disrupted by zTERT knockdown, the telomere lengths are not significantly altered throughout early development. Induced p53 deficiency, as well as overexpression of the anti-apoptotic proteins Bcl-2 and E1B-19K, significantly relieves the decreased blood cells numbers caused by zTERT knockdown, but not the impaired blood cell differentiation. Surprisingly, only the reverse transcriptase motifs of zTERT are crucial, but the telomerase RNA-binding domain of zTERT is not required, for rescuing complete hematopoiesis. This is therefore the first demonstration of a non-canonical catalytic activity of TERT, which is different from "authentic" telomerase activity, is required for during vertebrate hematopoiesis. On the other hand, zTERT deficiency induced a defect in hematopoiesis through a potent and specific effect on the gene expression of key regulators in the absence of telomere dysfunction. These results suggest that TERT non-canonically functions in hematopoietic cell differentiation and survival in vertebrates, independently of its role in telomere homeostasis. The data also provide insights into a non-canonical pathway by which TERT functions to modulate specification of hematopoietic stem/progenitor cells during vertebrate development. (276 words).