Here we analyze the functional interaction between Ku86 and telomerase at the mammalian telomere by studying mice deficient for both proteins. We show that absence of Ku86 prevents the end‐to‐end chromosomal fusions that result from critical telomere shortening in telomerase‐deficient mice. In addition, Ku86 deficiency rescues the male early germ cell apoptosis triggered by short telomeres in these mice. Together, these findings define a role for Ku86 in mediating chromosomal instability and apoptosis triggered by short telomeres. In addition, we show here that Ku86 deficiency results in telomerase‐dependent telomere elongation and in the fusion of random pairs of chromosomes in telomerase‐proficient cells, suggesting a model in which Ku86 keeps normal‐length telomeres less accessible to telomerase‐mediated telomere lengthening and to DNA repair activities.