Telomerase is crucial for the maintenance of stem/progenitor cells in adult tissues and is detected in most malignant cancers, including osteosarcoma. However, the relationship between telomerase expression and cancer stem cells remains unknown. We observed that sphere-derived osteosarcoma cells had higher telomerase activity, indicating that telomerase activity might be enriched in osteosarcoma stem cells. We sorted subpopulations with high or low telomerase activity (TEL) using hTERT transcriptional promoter-induced green fluorescent protein (GFP). The TELpos cells showed an increased sphere and tumor propagating capacity compared to TELneg cells, and enhanced stem cell-like properties such as invasiveness, metastatic activity and resistance to chemotherapeutic agents both in vitro and in vivo. Furthermore, the telomerase inhibitor MST312 prevented tumorigenic potential both in vitro and in vivo, preferentially targeting the TELpos cells. These data support telomerase inhibition as a potential targeted therapy for osteosarcoma stem-like cells.