Telomere biology is frequently associated with disease evolution in human cancer and dysfunctional telomeres have been demonstrated to contribute to genetic instability. In BCR-ABL(+) chronic myeloid leukemia (CML), accelerated telomere shortening has been shown to correlate with leukemia progression, risk score and response to treatment. Here, we demonstrate that proliferation of murine CML-like bone marrow cells strongly depends on telomere maintenance. CML-like cells of telomerase knockout mice with critically short telomeres (CML-iG4) are growth retarded and proliferation is terminally stalled by a robust senescent cell cycle arrest. In sharp contrast, CML-like cells with pre-shortened, but not critically short telomere lengths (CML-G2) grew most rapidly and were found to express a specific 'telomere-associated secretory phenotype', comprising secretion of chemokines, interleukins and other growth factors, thereby potentiating oncogene-driven growth. Moreover, conditioned supernatant of CML-G2 cells markedly enhanced proliferation of CML-WT and pre-senescent CML-iG4 cells. Strikingly, a similar inflammatory mRNA expression pattern was found with disease progression from chronic phase to accelerated phase in CML patients. These findings demonstrate that telomere-induced senescence needs to be bypassed by leukemic cells in order to progress to blast crisis and provide a novel mechanism by which telomere shortening may contribute to disease evolution in CML.