The cancer-prone and premature aging disease Werner syndrome is due to loss of WRN gene function. Cells lacking WRN demonstrate genomic instability, including telomeric abnormalities and undergo premature senescence, suggesting defects in telomere metabolism. This notion is strongly supported by our finding of physical and functional interactions between WRN and TRF2, a telomeric repeat binding factor essential for proper telomeric structure. TRF2 binds to DNA substrates containing telomeric repeats and facilitates their degradation specifically by WRN exonuclease activity. WRN and TRF2 also interact directly in the absence of DNA. These results suggest that TRF2 recruits WRN for accurate processing of telomeric structures in vivo. Thus, our findings link problems in telomere maintenance to both carcinogenesis and specific features of aging.