While the mechanisms of telomere maintenance has been investigated in dividing cells, little is known about the stability of telomeres in quiescent cells and how dysfunctional telomeres are processed in non-proliferating cells. Here we examine the stability of telomeres in quiescent cells using fission yeast. While wild type telomeres are stable in quiescence, we observe that eroded telomeres were highly rearranged during quiescence in telomerase minus cells. These rearrangements depend on homologous recombination (HR) and correspond to duplications of subtelomeric regions. HR is initiated at newly identified subtelomeric homologous repeated sequences (HRS). We further show that TERRA (Telomeric Repeat-containing RNA) is increased in post-mitotic cells with short telomeres and correlates with telomere rearrangements. Finally, we demonstrate that rearranged telomeres prevent cells to exit properly from quiescence. Taken together, we describe in fission yeast a mode of telomere repair mechanism specific to post-mitotic cells that is likely promoted by transcription.