Telomere integrity plays a crucial role in the capacity for continuous cell proliferation. In some circumstances, shortened telomeres contribute to cell arrest or death, but in others, shortened telomeres may actually enhance the incidence and spectrum of tumors. Resolution of this apparent paradox requires a more detailed understanding of a non-functional telomere. Recent evidence reveals that critically shortened or uncapped telomeres share molecular hallmarks of damaged DNA. It is likely that the cellular response to this DNA damage, influenced by the nature of the damage itself, affects the outcome of loss of telomere function.