Telomeres prevent chromosome ends from being recognized as double-stranded breaks (DSBs). Meanwhile, G/C-rich repetitive telomeric DNA is susceptible to attack by DNA-damaging agents. How cells balance the need to protect DNA ends and the need to repair DNA lesions in telomeres is unknown. Here we show that telomeric DSBs are efficiently repaired in proliferating cells, but are irreparable in stress-induced and replicatively senescent cells. Using the CRISPR-Cas9 technique, we specifically induce DSBs at telomeric or subtelomeric regions. We find that DSB repair (DSBR) at subtelomeres occurs in an error-prone manner resulting in small deletions, suggestive of NHEJ. However, DSBR in telomeres involves 'telomere-clustering', 3'-protruding C-rich telomeric ssDNA, and HR between sister-chromatid or interchromosomal telomeres. DSBR in telomeres is suppressed by deletion or inhibition of Rad51. These findings reveal proliferation-dependent DSBR in telomeres and suggest that telomeric HR, which is normally constitutively suppressed, is activated in the context of DSBR.