Werner syndrome (WS) is characterized by features of premature aging and is caused by loss of the RecQ helicase protein WRN. WS fibroblasts display defects associated with telomere dysfunction, including accelerated telomere erosion and premature senescence. In yeast, RecQ helicases act in an alternative pathway for telomere lengthening (ALT) via homologous recombination. We found that WRN associates with telomeres when dissociation of telomeric D loops is likely during replication and recombination. In human ALT cells, WRN associates directly with telomeric DNA. The majority of TRF1/PCNA colocalizing foci contained WRN in live S phase ALT cells but not in telomerase-positive HeLa cells. Biochemically, the WRN helicase and 3' to 5' exonuclease act simultaneously and cooperate to release the 3' invading tail from a telomeric D loop in vitro. The telomere binding proteins TRF1 and TRF2 limit digestion by WRN. We propose roles for WRN in dissociating telomeric structures in telomerase-deficient cells.