In telomerase-deficient Saccharomyces cerevisiae, telomeres are maintained by recombination. Here we used a S. cerevisiae assay for characterizing gross chromosomal rearrangements (GCRs) to analyze genome instability in post-senescent telomerase-deficient cells. Telomerase-deficient tlc1 and est2 mutants did not have increased GCR rates, but their telomeres could be joined to other DNAs resulting in chromosome fusions. Inactivation of Tel1 or either the Rad51 or Rad59 recombination pathways in telomerase-deficient cells increased the GCR rate, even though telomeres were maintained. The GCRs were translocations and chromosome fusions formed by nonhomologous end joining. We observed chromosome fusions only in mutant strains expressing Rad51 and Rad55 or when Tel1 was inactivated. In contrast, inactivation of Mec1 resulted in more inversion translocations such as the isochromosomes seen in human tumors. These inversion translocations seemed to be formed by recombination after replication of broken chromosomes.