Telomerase-deficient Saccharomyces cerevisiae cells show a progressive decrease in telomere length. When grown for several days in log phase, the tlc1Delta cells initially display wild-type growth kinetics with subsequent loss of growth potential after which survivors are generated via RAD52-dependent homologous recombination. We found that chromosome loss in these telomerase-deficient cells only increased after a significant decline in growth potential of the culture. At earlier stages of growth, as the telomerase-deficient cells began to show loss of growth potential, the cells arrested in G2/M and showed RNR3 induction and Rad53p phosphorylation. These responses were dependent on RAD24 and MEC1, suggesting that short telomeres are recognized as DNA damage and signal G2/M arrest.