Various stresses increase disease susceptibility and accelerate aging, and increasing evidence suggests that these effects can be transmitted over generation. Epidemiological studies suggest that stressors experienced by parents affect the longevity of their offspring, possibly by regulating telomere dynamics. Telomeres are elongated by telomerase and shortened by certain stresses as well as telomere repeat-containing RNA (TERRA), a telomere transcript. However, the mechanism underlying the transgenerational effects is poorly understood. Here, we show that TNF-α, which is induced by various psychological stresses, induces the p38-dependent phosphorylation of ATF7, a stress-responsive chromatin regulator, in mouse testicular germ cells. This caused a release of ATF7 from the TERRA gene promoter in the subtelomeric region, which disrupted heterochromatin and induced TERRA. TERRA was transgenerationally transmitted to zygotes via sperm and caused telomere shortening. These results suggest that ATF7 and TERRA play key roles in paternal stress-induced telomere shortening in the offspring.