The shelterin protein TRF2 is essential for chromosome-end protection. Depletion of TRF2 causes chromosome end-to-end fusions, initiating genomic instability that can be cancer promoting. Paradoxically, significant increased levels of TRF2 are observed in a subset of human cancers. Experimental overexpression of TRF2 has also been shown to induce telomere shortening, through an unknown mechanism. Here we report that TRF2 overexpression results in replication stalling in duplex telomeric repeat tracts and the subsequent formation of telomeric ultrafine anaphase bridges (UFBs), ultimately leading to stochastic loss of telomeric sequences. These TRF2 overexpression-induced telomere deletions generate chromosome fusions resembling those detected in human cancers and in mammalian cells containing critically shortened telomeres. Therefore, our findings have uncovered a second pathway by which altered TRF2 protein levels can induce end-to-end fusions. The observations also provide mechanistic insight into the molecular basis of genomic instability in tumour cells containing significantly increased TRF2 levels.