The G-rich strand of human telomeric DNA can fold into a four-stranded structure called G-quadruplex and inhibit telomerase activity that is expressed in 85-90% tumor cells. For this reason, telomere quadruplex is emerging as a potential therapeutic target for cancer. Information on the structure of the quadruplex in the physiological environment is important for structure-based drug design targeting the quadruplex. Recent studies have raised significant controversy regarding the exact structure of the quadruplex formed by human telomeric DNA in a physiological relevant environment. Studies on the crystal prepared in K+ solution revealed a distinct propeller-shaped parallel-stranded conformation. However, many later works failed to confirm such structure in physiological K+ solution but rather led to the identification of a different hybrid-type mixed parallel/antiparallel quadruplex. Here we demonstrate that human telomere DNA adopts a parallel-stranded conformation in physiological K+ solution under molecular crowding conditions created by PEG. At the concentration of 40% (w/v), PEG induced complete structural conversion to a parallel-stranded G-quadruplex. We also show that the quadruplex formed under such a condition has unusual stability and significant negative impact on telomerase processivity. Since the environment inside cells is molecularly crowded, our results obtained under the cell mimicking condition suggest that the parallel-stranded quadruplex may be the more favored structure under physiological conditions, and drug design targeting the human telomeric quadruplex should take this into consideration.