Hydroxyurea (HU) is a chemotherapeutic agent commonly used for various malignancies and hematological disorders, including chronic myelogenous leukemia and sickle cell anemia. We show here that chronic, low-level treatment with HU induces a variety of defects in telomere replication and maintenance. HU treatment preferentially decreased the rate of telomere DNA synthesis and altered the cell cycle timing of telomere replication. HU reduced the expression levels of telomere repeat RNA (TERRA). In some cells, HU caused a rapid loss of telomere restriction fragment length. Chromatin immunoprecipitation (ChIP) assay indicated that telomere repeat binding factors TRF1 and TRF2 dissociate from telomere DNA after HU treatment. TRF2 protein purified from HU treated cells showed a modest reduction in DNA binding activity and a change in isoelectric point as measured by 2D gel electrophoresis. However, chronic low level HU treatment did not evoke a DNA replication checkpoint response, suggesting that the mechanism of action is distinct from the well-characterized S-phase checkpoint pathway. We conclude that therapeutic doses of HU preferentially effects telomere replication and maintenance, through a mechanism that may involve the direct modification of TRF2. These findings provide new insight into the potential mechanisms of action of HU at telomeres and in cancer chemotherapies.