A growing body of literature suggests that the homologous recombination/repair (HR) pathway cooperates with components of the shelterin complex to promote both telomere maintenance and nontelomeric HR. This may be due to the ability of both HR and shelterin proteins to promote strand invasion, wherein a single-stranded DNA (ssDNA) substrate base pairs with a homologous double-stranded DNA (dsDNA) template displacing a loop of ssDNA (D-loop). Rad51 recombinase catalyzes D-loop formation during HR, and telomere repeat binding factor 2 (TRF2) catalyzes the formation of a telomeric D-loop that stabilizes a looped structure in telomeric DNA (t-loop) that may facilitate telomere protection. We have characterized this functional interaction in vitro using a fluorescent D-loop assay measuring the incorporation of Cy3-labeled 90-nucleotide telomeric and nontelomeric substrates into telomeric and nontelomeric plasmid templates. We report that preincubation of a telomeric template with TRF2 inhibits the ability of Rad51 to promote telomeric D-loop formation upon preincubation with a telomeric substrate. This suggests Rad51 does not facilitate t-loop formation and suggests a mechanism whereby TRF2 can inhibit HR at telomeres. We also report a TRF2 mutant lacking the dsDNA binding domain promotes Rad51-mediated nontelomeric D-loop formation, possibly explaining how TRF2 promotes nontelomeric HR. Finally, we report telomere repeat binding factor 1 (TRF1) promotes Rad51-mediated telomeric D-loop formation, which may facilitate HR-mediated replication fork restart and explain why TRF1 is required for efficient telomere replication.