Idiopathic pulmonary fibrosis (IPF) is an age-related disease featuring progressive lung scarring. To elucidate the molecular basis of IPF, we performed exome sequencing of familial kindreds with pulmonary fibrosis. Gene burden analysis comparing 78 European cases and 2,816 controls implicated PARN, an exoribonuclease with no previous connection to telomere biology or disease, with five new heterozygous damaging mutations in unrelated cases and none in controls (P = 1.3 × 10(-8)); mutations were shared by all affected relatives (odds in favor of linkage = 4,096:1). RTEL1, an established locus for dyskeratosis congenita, harbored significantly more new damaging and missense variants at conserved residues in cases than in controls (P = 1.6 × 10(-6)). PARN and RTEL1 mutation carriers had shortened leukocyte telomere lengths, and we observed epigenetic inheritance of short telomeres in family members. Together, these genes explain ~7% of familial pulmonary fibrosis and strengthen the link between lung fibrosis and telomere dysfunction.