A telomere-binding protein consisting of 56-kDa (alpha) and 41-kDa (beta) subunits binds specifically to the single-stranded T4G4T4G4 sequence at the termini of macronuclear DNA molecules in Oxytricha nova. The recent availability of separate alpha and beta polypeptides, expressed in Escherichia coli, allows investigation of the assembly of the telomeric complex ("telosome") from its individual components. By mixing wild-type subunits and electrophoretically distinct variants, we verify that the telosome contains one alpha and one beta subunit. By using telomeric DNAs of two lengths, we find that there is one DNA molecule per telosome. The DNA-protein and subunit-subunit interactions were studied by glycerol gradient sedimentation and chemical cross-linking. The formation of alpha-DNA and beta-DNA cross-links in the telomeric complex indicates that both subunits are in proximity to the DNA. When incubated together, both subunits exist predominantly as monomers in the absence of telomeric DNA. Upon binding to DNA, alpha and beta subunits directly interact with each other to form a heterodimer. We suggest that this DNA-dependent dimerization may allow each subunit to carry out distinct functions as a monomer, in addition to its participation in chromosome capping as part of the heterodimer.