In the alternative pathway of telomere lengthening (ALT), neoplastic cell growth is prolonged by telomere recombination. We show that ALT is unexpectedly characterized by high rates of ongoing pericentromeric chromosomal instability. Combined with telomeric recombination, ALT pericentromeric instability generates neoacrocentric chromosomes. In the present studies, we describe a subgroup of ALT neoacrocentric minute chromosomes, composed of DNA entities two to five times smaller in size than human chromosome 21. The frequencies of ALT minute chromosomes were increased by gamma-irradiation and suppressed by telomerase. Continuous growth after telomerase inhibition/depletion was followed by increased rates of telomeric sister chromatid recombination and the emergence of minute chromosomes. We show that ALT minute chromosomes were derived from true centromeric fissions and/or chromosomal breakage/fusion/bridge cycles. They exhibit a two-chromatid structure, carry genomic DNA, centromeric and telomeric repeats, and display regular mitotic functionality. These observations are important in understanding the global genomic instability that characterizes most human advanced malignancies.