Alternative Lengthening of Telomeres (ALT) is an aberrant DNA recombination pathway which grants replicative immortality to approximately 10% of all cancers. Despite this high prevalence of ALT in cancer, the mechanism and genetics by which cells activate this pathway remain incompletely understood. A major challenge in dissecting the events that initiate ALT is the extremely low frequency of ALT induction in human cell systems. Guided by the genetic lesions that have been associated with ALT from cancer sequencing studies, we genetically engineered primary human pluripotent stem cells to deterministically induce ALT upon differentiation. Using this genetically defined system, we demonstrate that disruption of the p53 and Rb pathways in combination with ATRX loss-of-function is sufficient to induce all hallmarks of ALT and results in functional immortalization in a cell type-specific manner. We further demonstrate that ALT can be induced in the presence of telomerase, is neither dependent on telomere shortening nor crisis, but is rather driven by continuous telomere instability triggered by the induction of differentiation in ATRX-deficient stem cells.