Alternative lengthening of telomeres (ALT) is a homology-directed repair (HDR) mechanism of telomere elongation that controls proliferation in subsets of aggressive cancer. Recent studies have revealed that telomere repeat-containing RNA (TERRA) promotes ALT-associated HDR (ALT-HDR). Here, we report that RAD51AP1, a crucial ALT factor, interacts with TERRA and utilizes it to generate D- and R-loop HR intermediates. We also show that RAD51AP1 binds to and might stabilize TERRA-containing R-loops as RAD51AP1 depletion reduces R-loop formation at telomere DNA breaks. Proteomic analyses uncover a role for RAD51AP1-mediated TERRA R-loop homeostasis in a mechanism of chromatin-directed suppression of TERRA and prevention of transcription-replication collisions (TRCs) during ALT-HDR. Intriguingly, we find that both TERRA binding and this non-canonical function of RAD51AP1 require its intrinsic SUMO-SIM regulatory axis. These findings provide insights into the multi-contextual functions of RAD51AP1 within the ALT mechanism and regulation of TERRA.