Telomeres are nucleoprotein complexes comprising telomeric DNA repeats bound by the multiprotein shelterin complex. A dynamic binary switch between telomerase-extendible and telomerase-nonextendible telomeric states determines telomere length homeostasis. However, the molecular nature of the nonextendible state is largely unknown. Here, we show that, in fission yeast, Tpz1 (the ortholog of human TPP1)-mediated complete linkage within the shelterin complex, bridging telomeric dsDNA to ssDNA, controls the telomerase-nonextendible state. Disruption of this linkage leads to unregulated telomere elongation while still retaining the shelterin components on telomeres. Therefore, the linkage within the shelterin components, rather than the individual shelterin components per se, defines the telomerase-nonextendible state. Furthermore, epistasis analyses reveal that Tpz1 also participates in the activation of telomeres to the extendible state via its interaction with Ccq1. Our results suggest critical regulatory roles of Tpz1 in the telomere binary switch.