Telomeric and subtelomeric regions of human chromosomes largely consist of highly repetitive and redundant DNA sequences, resulting in a paucity of unique DNA sequences specific to individual telomeres. Accordingly, it is difficult to analyze telomere metabolism on a single-telomere basis. To circumvent this problem, we have exploited a human artificial chromosome (HAC#21) derived from human chromosome 21 (hChr21). HAC#21 was generated through truncation of the long arm of native hChr21 by the targeted telomere seeding technique. The newly established telomere of HAC#21 lacks canonical subtelomere structures but possesses unique sequences derived from the target vector backbone and the internal region of hChr21 used for telomere targeting, which enabled us to molecularly characterize the single HAC telomere. We established HeLa and NIH-3T3 sub-lines containing a single copy of HAC#21, where it was robustly maintained. The seeded telomere is associated with telomeric proteins over a length similar to that reported in native telomeres, and is faithfully replicated in mid-S phase in HeLa cells. We found that the seeded telomere on HAC#21 is transcribed from the newly juxtaposed site. The transcript, HAC-telRNA, shares several features with TERRA (telomeric repeat-containing RNA): it is a short-lived RNA polymerase II transcript, rarely contains a poly(A) tail, and associates with chromatin. Interestingly, HAC-telRNA undergoes splicing. These results suggest that transcription into TERRA is locally influenced by the subtelomeric context. Taken together, we have established human and mouse cell lines that will be useful for analyzing the behavior of a uniquely identifiable, functional telomere.