Genomic instability is a hallmark of cancer. Whether it also occurs in Cancer Associated Fibroblasts (CAFs) remains to be carefully investigated. Loss of CSL/RBP-Jκ, the effector of canonical NOTCH signaling with intrinsic transcription repressive function, causes conversion of dermal fibroblasts into CAFs. Here, we find that CSL down-modulation triggers DNA damage, telomere loss and chromosome end fusions that also occur in skin Squamous Cell Carcinoma (SCC)-associated CAFs, in which CSL is decreased. Separately from its role in transcription, we show that CSL is part of a multiprotein telomere protective complex, binding directly and with high affinity to telomeric DNA as well as to UPF1 and Ku70/Ku80 proteins and being required for their telomere association. Taken together, the findings point to a central role of CSL in telomere homeostasis with important implications for genomic instability of cancer stromal cells and beyond.