The fission yeast Pot1 (protection of telomeres) protein binds to the single-stranded extensions at the ends of telomeres, where its presence is critical for the maintenance of linear chromosomes. Homologs of Pot1 have been identified in a wide variety of eukaryotes, including plants, animals, and humans. We now show that Pot1 plays dual roles in telomere length regulation and chromosome end protection. Using a series of Pot1 truncation mutants, we have defined distinct areas of the protein required for chromosome stability and for limiting access to telomere ends by telomerase. We provide evidence that a large portion of Pot1, including the N-terminal DNA binding domain and amino acids close to the C terminus, is essential for its protective function. C-terminal Pot1 fragments were found to exert a dominant-negative effect by displacing endogenous Pot1 from telomeres. Reducing telomere-bound Pot1 in this manner resulted in dramatic lengthening of the telomere tract. Upon further reduction of Pot1 at telomeres, the opposite phenotype was observed: loss of telomeric DNA and chromosome end fusions. Our results demonstrate that cells must carefully regulate the amount of telomere-bound Pot1 to differentiate between allowing access to telomerase and catastrophic loss of telomeres.