Essential telomere 'capping' proteins act as a safeguard against ageing and cancer by inhibiting the DNA damage response (DDR) and regulating telomerase recruitment, thus distinguishing telomeres from double-strand breaks (DSBs). Uncapped telomeres and unrepaired DSBs can both stimulate a potent DDR, leading to cell cycle arrest and cell death. Using the cdc13-1 mutation to conditionally 'uncap' telomeres in budding yeast, we show that the telomere capping protein Cdc13 protects telomeres from the activity of the helicase Pif1 and the exonuclease Exo1. Our data support a two-stage model for the DDR at uncapped telomeres; Pif1 and Exo1 resect telomeric DNA <5 kb from the chromosome end, stimulating weak checkpoint activation; resection is extended >5 kb by Exo1 and full checkpoint activation occurs. Cdc13 is also crucial for telomerase recruitment. However, cells lacking Cdc13, Pif1 and Exo1, do not senesce and maintain their telomeres in a manner dependent upon telomerase, Ku and homologous recombination. Thus, attenuation of the DDR at uncapped telomeres can circumvent the need for otherwise-essential telomere capping proteins.