Expression of the high-risk human papillomavirus (HPV-16) E7 oncoprotein extends the life span of primary human keratinocytes and partially restores telomere length in the absence of telomerase. The molecular basis of this activity is incompletely understood. Here, we show that HPV-16 E7 induces an increased formation of alternative lengthening of telomeres (ALT)-associated promyelocytic leukemia bodies (APBs) in early passage primary human keratinocytes as well as HPV-negative tumor cells. This activity was found to require sequences of HPV-16 E7 involved in degradation of the retinoblastoma tumor suppressor protein as well as regions in the COOH terminus. HPV-16 E7-induced APBs contained ssDNA and several proteins that are involved in the response to DNA replication stress, most notably the Fanconi anemia D2 protein (FANCD2) as well as BRCA2 and MUS81. In line with these results, we found that FANCD2-containing APBs form in an ATR-dependent manner in HPV-16 E7-expressing cells. To directly show a role of FANCD2 in ALT, we provide evidence that knockdown of FANCD2 rapidly causes telomere dysfunction in cells that rely on ALT to maintain telomeres. Taken together, our results suggest a novel link between replication stress and recombination-based telomere maintenance that may play a role in HPV-16 E7-mediated extension of host cell life span and immortalization.