Although t-loops protect telomeres, they are at risk of cleavage by Holliday junction (HJ) resolvases if branch migration converts the three-way t-loop junction into four-way HJs. T-loop cleavage is repressed by the TRF2 basic domain, which binds three- and four-way junctions and protects HJs in vitro. By replacing the basic domain with bacterial-protein domains binding three- and four-way junctions, we demonstrated the in vivo relevance of branched-DNA binding. Branched-DNA binding also repressed PARP1, presumably by masking the PARP1 site in the t-loop junction. Although PARP1 recruits HJ resolvases and promotes t-loop cleavage, PARP1 activation alone did not result in t-loop cleavage, thus suggesting that the basic domain also prevents formation of HJs. Concordantly, removal of HJs by BLM helicase mitigated t-loop cleavage in response to loss of the basic domain. We propose that TRF2 masks and stabilizes the t-loop three-way junction, thereby protecting telomeres from detrimental deletions and PARP1 activation.