Ku is a conserved heterodimeric DNA‐binding protein that plays critical roles in DNA repair and telomere homeostasis. In Saccharomyces cerevisiae , deletion of YKU70 or YKU80 results in an inability to grow at 37°C. This is suppressed by overexpression of several components of telomerase ( EST1 , EST2 and TLC1 ). We show that overexpression of EST2 or TLC1 in yku80 mutants does not restore efficient DNA repair, or restore normal telomere function, as measured by telomere length, single‐stranded G‐rich strand or transcriptional silencing. Instead, yku80 mutants activate a Rad53p‐dependent DNA‐damage checkpoint at 37°C and this is suppressed by overexpression of EST2 or TLC1 . Indeed, deletion of genes required for Rad53p activation also suppresses the yku80 temperature sensitivity. These results suggest that activation of the DNA‐damage checkpoint in yku mutants at 37°C does not result from reduced telomere length per se , but reflects an alteration of the telomere structure that is recognized as damaged DNA.