The response to DNA damage involves regulation of several essential processes to maximize the accuracy of DNA damage repair and cell survival. Telomerase has the potential to interfere with repair by inappropriately adding telomeres to DNA breaks. It was unknown whether cells modulate telomerase in response to DNA damage to increase the accuracy of repair. Here, we report that telomerase action is regulated as a part of the cellular response to DNA double-strand breaks (DSBs). Using yeast, we show that the main ATR/Mec1 DNA damage signalling pathway regulates telomerase action at DSBs. After DNA damage, MEC1-RAD53-DUN1-dependent phosphorylation of the telomerase inhibitor Pif1 occurs. Using a separation of function PIF1 mutation, we show that this phosphorylation is specifically required for the Pif1-mediated telomerase inhibition that takes place at DNA breaks, but not for that at telomeres. Hence DNA damage signalling down-modulates telomerase action at DNA breaks through Pif1 phosphorylation, thus preventing aberrant healing of broken DNA ends by telomerase. These findings uncover a new regulatory mechanism that coordinates competing DNA end-processing activities and thereby promotes DNA repair accuracy and genome integrity.