A nicked molecular beacon (MB)-functionalized probe has been designed for in situ imaging and detection of intracellular telomerase activity. The nick separates the MB into two segments: a shorter telomerase primer (TSP) sequence as a part of the 5'-end stem and a longer sequence to form a loop with one thiol-labeled 3'-end stem. The MB can be opened by substitutional hybridization of the telomerase-triggered stem elongation product, which leads to separation of the Cy5 at the S'-end nick from the gold nanoparticle (AuNP) as the nanocarrier and thus inhibits the energy transfer from Cy5 to AuNP. Upon endocytosis of the probe, the TSP can be extended by intracellular telomerase at its 3' end to produce the telomeric repeated sequence, which leads to the inner chain substitution and thus turns on the fluorescence of Cy5. The probe provides a one-step incubation technique for quantification and monitoring of the telomerase activity in living cells. The practicality of the proposed approach for distinguishing tumor cells from normal cells and monitoring the decrease of telomerase activity during treatment with antitumor drugs demonstrates its potential in clinical diagnostic and therapeutic monitoring.