Telomerase maintains telomere length and is implicated in senescence and immortalization of mammalian cells. Two essential components for this enzyme are telomerase reverse transcriptase (TERT) and the telomerase RNA component (encoded by the TERC gene). These telomerase subunit genes are known to be mainly expressed by specificity protein 1 (Sp1). MBD1-containing chromatin-associated factor 1 (MCAF1), also known as ATFa-associated modulator (AM) and activating transcription factor 7-interacting protein (ATF7IP), mediates gene regulation, although the precise function of MCAF1 remains to be elucidated. Here, we report that MCAF1 is involved in Sp1-dependent maintenance of telomerase activity in cancer cells. Two evolutionarily conserved domains of MCAF1 directly interact with Sp1 and the general transcriptional apparatus. Selective depletion of MCAF1 or Sp1 down-regulates TERT and TERC genes in cultured cells, which results in decreased telomerase activity. The transcriptionally active form of RNA polymerase II and the general transcription factor ERCC3 decreased in the TERT promoter under the loss of MCAF1 or Sp1. Consistently, MCAF1 is found to be frequently overexpressed in naturally occurring cancers that originate in different tissues. Our data suggest that transcriptional function of MCAF1 facilitates telomerase expression by Sp1, which may be a common mechanism in proliferative cancer cells.