Abstract Telomeres protect chromosome ends from being repaired as double-strand breaks (DSBs). Just as DSB repair is suppressed at telomeres, de novo telomere addition is suppressed at the site of DSBs. To identify factors responsible for this suppression, we developed an assay to monitor de novo telomere formation in Drosophila, an organism in which telomeres can be established on chromosome ends with essentially any sequence. Germline expression of the I-SceI endonuclease resulted in precise telomere formation at its cut site with high efficiency. Using this assay, we quantified the frequency of telomere formation in different genetic backgrounds with known or possible defects in DNA damage repair. We showed that disruption of DSB repair factors (Rad51 or DNA ligase IV) or DSB sensing factors (ATRIP or MDC1) resulted in more efficient telomere formation. Interestingly, partial disruption of factors that normally regulate telomere protection (ATM or NBS) also led to higher frequencies of telomere formation, suggesting that these proteins have opposing roles in telomere maintenance vs. establishment. In the ku70 mutant background, telomere establishment was preceded by excessive degradation of DSB ends, which were stabilized upon telomere formation. Most strikingly, the removal of ATRIP caused a dramatic increase in telomeric retrotransposon attachment to broken ends. Our study identifies several pathways thatsuppress telomere addition at DSBs, paving the way for future mechanistic studies.