Telomeres protect chromosome ends from fusing to double-stranded breaks (DSBs). Using a quantitative real-time PCR assay, we show that nonhomologous end joining between a telomere and an inducible DSB was undetectable in wild-type cells, but occurred within a few hours of DSB induction in approximately 1/2000 genomes in telomerase-deficient cells and in >1/1000 genomes in telomerase-deficient cells also lacking the ATM homolog Tel1p. The fused telomeres contained very little telomeric DNA, suggesting that catastrophic telomere shortening preceded fusion. Lengthening of telomeres did not prevent such catastrophic telomere shortening and fusion events. Telomere-DSB fusion also occurred in cells containing a catalytically inactive telomerase and in tel1 mec1 cells where telomerase cannot elongate telomeres. Thus, telomerase and Tel1p function in telomere protection as well as in telomere elongation.