Efficient and faithful replication of telomeric DNA is critical for maintaining genome integrity. The G-quadruplex (G4) structure arising in the repetitive TTAGGG sequence is thought to stall replication forks, impairing efficient telomere replication and leading to telomere instabilities. However, pathways modulating telomeric G4 are poorly understood, and it is unclear whether defects in these pathways contribute to genome instabilities in vivo. Here, we report that mammalian DNA2 helicase/nuclease recognizes and cleaves telomeric G4 in vitro. Consistent with DNA2's role in removing G4, DNA2 deficiency in mouse cells leads to telomere replication defects, elevating the levels of fragile telomeres (FTs) and sister telomere associations (STAs). Such telomere defects are enhanced by stabilizers of G4. Moreover, DNA2 deficiency induces telomere DNA damage and chromosome segregation errors, resulting in tetraploidy and aneuploidy. Consequently, DNA2-deficient mice develop aneuploidy-associated cancers containing dysfunctional telomeres. Collectively, our genetic, cytological, and biochemical results suggest that mammalian DNA2 reduces replication stress at telomeres, thereby preserving genome stability and suppressing cancer development, and that this may involve, at least in part, nucleolytic processing of telomeric G4.