Loss of chromosome end protection through telomere erosion is a hallmark of aging and senescence. Here we developed an experimental system that mimics physiological telomere deprotection in human cells and discovered that the telomere deprotection response is functionally distinct from the genomic DNA damage response. We found that, unlike genomic breaks, deprotected telomeres that are recognized as DNA damage but remain in the fusion-resistant intermediate state activate differential ataxia telangiectasia mutated (ATM) signaling where CHK2 is not phosphorylated. Also unlike genomic breaks, we found that deprotected telomeres do not contribute to the G2/M checkpoint and are instead passed through cell division to induce p53-dependent G1 arrest in the daughter cells. Telomere deprotection is therefore an epigenetic signal passed between cell generations to ensure that replication-associated telomere-dependent growth arrest occurs in stable diploid G1 phase cells before genome instability can occur.