Progressive telomere shortening eventually results in chromosome fusions and genome instability as the cell's ability to distinguish chromosome ends from DNA double-strand breaks is compromised. In fission yeast, such events frequently produce stable survivors with all circular chromosomes. To shed light on the repair pathways that mediate chromosome end fusions and generate circular chromosomes, we have examined a diverse array of DNA repair factors. We show that telomere attrition-induced chromosome fusions are dependent on the fission yeast homologs of Rad52, the ERCC1/XPF endonuclease, the single-stranded DNA-binding protein RPA, and the Srs2 and Werner/Bloom helicases, but not Ku and ligase 4. Consistent with a recombinational mechanism of single-strand annealing, cloned junctions map to four of five homology regions in subtelomeric DNA. A comparison with telomere uncapping caused by the absence of the double-stranded telomere-binding protein Taz1 demonstrates that the circumstances and cause of telomere dysfunction profoundly affect which DNA repair pathway is engaged.