Telomere shortening limits the proliferative capacity of human cells, and age-dependent shortening of telomeres occurs in somatic tissues including hematopoietic stem cells (HSCs). It is currently unknown whether genomic and molecular damage that occurs in HSCs induced by telomere shortening is transmitted to the progenitor cells. Here we show that telomere shortening results in DNA damage accumulation and gene expression changes in quiescent HSCs of aged mice. Upon activation, a subset of HSCs with elevated levels of DNA damage and p16 expression are blocked from cell cycle entry, and apoptosis is induced in HSCs entering the cell cycle. Activation of both checkpoints associates with normalization of DNA damage and gene expression profiles at early progenitor stages. These findings indicate that quiescent HSCs have an elevated tolerance to accumulate genomic alterations in response to telomere shortening, but the transmission of these aberrations to the progenitor cell level is prevented by senescence and apoptosis.