Telomere repeats in budding yeast are maintained at a constant average length and protected ('capped'), in part, by mechanisms involving the TG(1-3) repeat-binding protein Rap1. However, metazoan telomere repeats (T(2)AG(3)) can be maintained in yeast through a Rap1-independent mechanism. Here, we examine the dynamics of capping and telomere formation at an induced DNA double-strand break flanked by varying lengths of T(2)AG(3) repeats. We show that a 60-bp T(2)AG(3) repeat array induces a transient G2/M checkpoint arrest, but is rapidly elongated by telomerase to generate a stable T(2)AG(3)/TG(1-3) hybrid telomere. In contrast, a 230-bp T(2)AG(3) array induces neither G2/M arrest nor telomerase elongation. This capped state requires the T(2)AG(3)-binding protein Tbf1, but is independent of two Tbf1-interacting factors, Vid22 and Ygr071c. Arrays of binding sites for three other subtelomeric or Myb/SANT domain-containing proteins fail to display a similar end-protection effect, indicating that Tbf1 capping is an evolved function. Unexpectedly, we observed strong telomerase association with non-telomeric ends, whose elongation is blocked by a Mec1-dependent mechanism, apparently acting at the level of Cdc13 binding.