Here we analyze the functional interaction between Ku86 and telomerase at the mammalian telomere by studying mice deficient for both proteins. We show that absence of Ku86 prevents the end-to-end chromosomal fusions that result from critical telomere shortening in telomerase-deficient mice. In addition, Ku86 deficiency rescues the male early germ cell apoptosis triggered by short telomeres in these mice. Together, these findings define a role for Ku86 in mediating chromosomal instability and apoptosis triggered by short telomeres. In addition, we show here that Ku86 deficiency results in telomerase-dependent telomere elongation and in the fusion of random pairs of chromosomes in telomerase-proficient cells, suggesting a model in which Ku86 keeps normal-length telomeres less accessible to telomerase-mediated telomere lengthening and to DNA repair activities.