Cdc13 performs an essential function in telomere end protection in budding yeast. Here, we analyze the consequences on telomere dynamics of cdc13-induced telomeric DNA damage in proliferating cells. Checkpoint-deficient cdc13-1 cells accumulated DNA damage and eventually senesced. However, these telomerase-proficient cells could survive by using homologous recombination but, contrary to telomerase-deficient cells, did so without prior telomere shortening. Strikingly, homologous recombination in cdc13-1 mec3, as well as in telomerase-deficient cdc13-1 cells, which were Rad52- and Rad50-dependent but Rad51-independent, exclusively amplified the TG(1-3) repeats. This argues that not only short telomeres are substrates for type II recombination. The Cdc13-1 mutant protein harbored a defect in its association with Stn1 and Ten1 but also an additional, unknown, defect that could not be cured by expressing a Cdc13-1- Ten1-Stn1 fusion. We propose that Cdc13 prevents telomere uncapping and inhibits recombination between telomeric sequences through a pathway distinct from and complementary to that used by telomerase.