Telomerase reverse transcribes short guanine (G)-rich DNA repeat sequences from its internal RNA template to maintain telomere length. G-rich telomere DNA repeats readily fold into G-quadruplex (GQ) structures in vitro, and the presence of GQ-prone sequences throughout the genome introduces challenges to replication in vivo. Using a combination of ensemble and single-molecule telomerase assays, we discovered that GQ folding of the nascent DNA product during processive addition of multiple telomere repeats modulates the kinetics of telomerase catalysis and dissociation. Telomerase reactions performed with telomere DNA primers of varying sequence or using GQ-stabilizing K+ versus GQ-destabilizing Li+ salts yielded changes in DNA product profiles consistent with formation of GQ structures within the telomerase-DNA complex. Addition of the telomerase processivity factor POT1-TPP1 altered the DNA product profile, but was not sufficient to recover full activity in the presence of Li+ cations. This result suggests GQ folding synergizes with POT1-TPP1 to support telomerase function. Single-molecule Förster resonance energy transfer experiments reveal complex DNA structural dynamics during real-time catalysis in the presence of K+ but not Li+, supporting the notion of nascent product folding within the active telomerase complex. To explain the observed distributions of telomere products, we globally fit telomerase time-series data to a kinetic model that converges to a set of rate constants describing each successive telomere repeat addition cycle. Our results highlight the potential influence of the intrinsic folding properties of telomere DNA during telomerase catalysis, and provide a detailed characterization of GQ modulation of polymerase function.