In eukaryotes, terminal chromosome repeats are bound by a specialized nucleoprotein complex that controls telomere length and protects chromosome ends from DNA repair and degradation. In mammals the "shelterin" complex mediates these central functions at telomeres. In the recent years it has become evident that also the heterochromatic structure of mammalian telomeres is implicated in telomere length regulation. Impaired telomeric chromatin compaction results in a loss of telomere length control. Progressive telomere shortening affects chromatin compaction at telomeric and subtelomeric repeats and activates alternative telomere maintenance mechanisms. Dynamics of chromatin structure of telomeres during early mammalian development and nuclear reprogramming further indicates a central role of telomeric heterochromatin in organismal development. In addition, the recent discovery that telomeres are transcribed, giving rise to UUAGGG-repeat containing TelRNAs/TERRA, opens a new level of chromatin regulation at telomeres. Understanding the links between the epigenetic status of telomeres, TERRA/TelRNA and telomere homeostasis will open new avenues for our understanding of organismal development, cancer and ageing.