Telomeres in mammals and plants are protected by the terminal t loop structure, the formation of which parallels the first steps of intrachromatid homologous recombination (HR). Under some circumstances, cells can also utilize an HR-based mechanism (alternative lengthening of telomeres [ALT]) as a back-up pathway for telomere maintenance. We have found that the Ku70/80 heterodimer, a central nonhomologous end-joining DNA repair factor, inhibits engagement of ALT in Arabidopsis telomerase-negative cells. To further assess HR activities at telomeres, we have developed a sensitive assay for detecting extrachromosomal telomeric circles (t circles) that may arise from t loop resolution and aberrant HR. We show that Ku70/80 specifically inhibits circle formation at telomeres, but not at centromeric and rDNA repeats. Ku inactivation results in increased formation of t circles that represent ∼4% of total telomeric DNA. However, telomeres in ku mutants are fully functional, indicating that telomerase efficiently heals ongoing terminal deletions arising from excision of the t circles.