Telomeres protect the normal ends of chromosomes from being recognized as deleterious DNA double-strand breaks. Recent studies have uncovered an apparent paradox: although DNA repair is prevented, several proteins involved in DNA damage processing and checkpoint responses are recruited to telomeres in every cell cycle and are required for end protection. It is currently not understood how telomeres prevent DNA damage responses from causing permanent cell cycle arrest. Here we show that fission yeast (Schizosaccharomyces pombe) cells lacking Taz1, an orthologue of human TRF1 and TRF2 (ref. 2), recruit DNA repair proteins (Rad22(RAD52) and Rhp51(RAD51), where the superscript indicates the human orthologue) and checkpoint sensors (RPA, Rad9, Rad26(ATRIP) and Cut5/Rad4(TOPBP1)) to telomeres. Despite this, telomeres fail to accumulate the checkpoint mediator Crb2(53BP1) and, consequently, do not activate Chk1-dependent cell cycle arrest. Artificially recruiting Crb2(53BP1) to taz1Δ telomeres results in a full checkpoint response and cell cycle arrest. Stable association of Crb2(53BP1) to DNA double-strand breaks requires two independent histone modifications: H4 dimethylation at lysine 20 (H4K20me2) and H2A carboxy-terminal phosphorylation (γH2A). Whereas γH2A can be readily detected, telomeres lack H4K20me2, in contrast to internal chromosome locations. Blocking checkpoint signal transduction at telomeres requires Pot1 and Ccq1, and loss of either Pot1 or Ccq1 from telomeres leads to Crb2(53BP1) foci formation, Chk1 activation and cell cycle arrest. Thus, telomeres constitute a chromatin-privileged region of the chromosomes that lack essential epigenetic markers for DNA damage response amplification and cell cycle arrest. Because the protein kinases ATM and ATR must associate with telomeres in each S phase to recruit telomerase, exclusion of Crb2(53BP1) has a critical role in preventing telomeres from triggering cell cycle arrest.