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Human telomeric regions are packaged as constitutive heterochromatin, characterized by extensive subtelomeric DNA methylation and specific histone modifications. ICF (immunodeficiency, centromeric instability, facial anomalies) type I patients carry mutations in DNA methyltransferase 3B (DNMT3B) that methylates de novo repetitive sequences during early embryonic development. ICF type I patient fibroblasts display hypomethylated subtelomeres, abnormally short telomeres and premature senescence. In order to study the molecular mechanism by which the failure to de novo methylate subtelomeres results in accelerated telomere shortening, we generated induced pluripotent stem cells (iPSCs) from 3 ICF type I patients. Telomeres were elongated in ICF-iPSCs during reprogramming, and the senescence phenotype was abolished despite sustained subtelomeric hypomethylation and high TERRA levels. Fibroblast-like cells (FLs) isolated from differentiated ICF-iPSCs maintained abnormally high TERRA levels, and telomeres in these cells shortened at an accelerated rate, leading to early senescence, thus recapitulating the telomeric phenotype of the parental fibroblasts. These findings demonstrate that the abnormal telomere phenotype associated with subtelomeric hypomethylation is overridden in cells expressing telomerase, therefore excluding telomerase inhibition by TERRA as a central mechanism responsible for telomere shortening in ICF syndrome. The data in the current study lend support to the use of ICF-iPSCs for modeling of phenotypic and molecular defects in ICF syndrome and for unraveling the mechanism whereby subtelomeric hypomethylation is linked to accelerated telomeric loss in this syndrome.