Telomeric chromatin is composed of TTAGGG repeats bound by the shelterin complex. Mammalian telomeres contain arrays of nucleosomes enriched in histone heterochromatic marks, and are associated with long non-coding telomeric RNAs. In addition, the adjacent subtelomeric DNA repeats are heavily methylated. The repressive chromatin environment at telomeres is thought to suppress the expression of closely located genes, a phenomenon known as "telomere position effect" (TPE), which can be influenced by telomere length and the telomeric chromatin structure. Here, we address the role of TRF2, a major telomere component, in the epigenetic regulation of telomeres. To this end, we took advantage of transgenic mice that overexpress TRF2 under the keratin 5 (K5) promoter (K5TRF2 mice). K5TRF2 mice have very short telomeres and an increased susceptibility to develop skin cancer. Interestingly, K5TRF2 cells show an aberrant nucleosomal organization at telomeres. In particular, K5TRF2 cells display a loss of heterochromatin marks at telomeric and subtelomeric repeats, which is concomitant with decreased abundance of core histones H3 and H4 and increased nucleosomal spacing at telomeres. Telomere shortening in K5TRF2 mice is also accompanied by decreased abundance of telomeric transcripts. Together, these findings indicate a previously unnoticed role for TRF2 in the assembly of telomeric chromatin.