Deletion of the telomerase RNA gene (TER1) in the yeast Kluyveromyces lactis results in gradual loss of telomeric repeats and progressively declining cell growth capability (growth senescence). We show that this initial growth senescence is characterized by abnormally large, defectively dividing cells and is delayed when cells initially contain elongated telomeres. However, cells that survive the initial catastrophic senescence emerge relatively frequently, and their subsequent growth without telomerase is surprisingly efficient. Survivors have lengthened telomeres, often much longer than wild type, but that are still subject to gradual shortening. Production of these postsenescence survivors is strongly dependent on the RAD52 gene. We propose that shortened, terminal telomeric repeat tracts become uncapped, promoting recombinational repair between them to regenerate lengthened telomeres in survivors. This process, which we term telomere cap-prevented recombination (CPR) may be a general alternative telomere maintenance pathway in eukaryotes.