Cells from Werner syndrome patients are characterized by slow growth rates, premature senescence, accelerated telomere shortening rates, and genome instability. The syndrome is caused by the loss of the RecQ helicase WRN, but the underlying molecular mechanism is unclear. Here we report that cells lacking WRN exhibit deletion of telomeres from single sister chromatids. Only telomeres replicated by lagging strand synthesis were affected, and prevention of loss of individual telomeres was dependent on the helicase activity of WRN. Telomere loss could be counteracted by telomerase activity. We propose that WRN is necessary for efficient replication of G-rich telomeric DNA, preventing telomere dysfunction and consequent genomic instability.