The Epstein-Barr virus (EBV) nuclear antigen (EBNA)-1 promotes the accumulation of chromosomal aberrations in malignant B cells by inducing oxidative stress. Here we report that this phenotype is associated with telomere dysfunction. Stable or conditional expression of EBNA1 induced telomere abnormalities including loss or gain of telomere signals, telomere fusion and heterogeneous length of telomeres. This was accompanied by the accumulation of extrachromosomal telomeres, telomere dysfunction-induced foci (TIFs) containing phosphorylated histone H2AX and the DNA damage response protein 53BP1, telomere-associated promyelocytic leukemia nuclear bodies (APBs), telomeric-sister chromatid exchanges and displacement of the shelterin protein TRF2. The induction of TIFs and APBs was inhibited by treatment with scavengers of reactive oxygen species (ROS) that also promoted the relocalization of TRF2 at telomeres. These findings highlight a novel mechanism by which EBNA1 may promote malignant transformation and tumor progression.