The shelterin proteins protect telomeres against activation of the DNA damage checkpoints and recombinational repair. We show here that a dimer of the shelterin subunit TRF2 wraps ∼90 bp of DNA through several lysine and arginine residues localized around its homodimerization domain. The expression of a wrapping-deficient TRF2 mutant, named Top-less, alters telomeric DNA topology, decreases the number of terminal loops (t-loops), and triggers the ATM checkpoint, while still protecting telomeres against non-homologous end joining (NHEJ). In Top-less cells, the protection against NHEJ is alleviated if the expression of the TRF2-interacting protein RAP1 is reduced. We conclude that a distinctive topological state of telomeric DNA, controlled by the TRF2-dependent DNA wrapping and linked to t-loop formation, inhibits both ATM activation and NHEJ. The presence of RAP1 at telomeres appears as a backup mechanism to prevent NHEJ when topology-mediated telomere protection is impaired. Benarroch-Popivker et al. show that TRF2 wraps DNA around its TRFH domain, thereby controlling telomeric DNA topology, t-loop formation, and ATM inhibition. In TRF2 wrapping-deficient cells, protection of telomeres against fusion relies on the recruitment of RAP1.