The human telomerase reverse transcriptase (hTERT) utilizes a template within the integral RNA subunit (hTR) to direct extension of telomeres. Telomerase exhibits repeat addition processivity (RAP) and must therefore translocate the nascent DNA product into a new RNA:DNA hybrid register to prime each round of telomere repeat synthesis. Here, we use single-molecule FRET and nuclease protection assays to monitor telomere DNA structure and dynamics during the telomerase catalytic cycle. DNA translocation during RAP proceeds through a previously uncharacterized kinetic substep during which the 3'-end of the DNA substrate base pairs downstream within the hTR template. The rate constant for DNA primer realignment reveals this step is not rate limiting for RAP, suggesting a second slow conformational change repositions the RNA:DNA hybrid into the telomerase active site and drives the extrusion of the 5'-end of the DNA primer out of the enzyme complex.