Telomere shortening as a consequence of cell divisions during aging and chronic diseases associates with an increased cancer risk. Experimental data revealed that telomere shortening results in telomere dysfunction, which in turn affects tumorigenesis in two ways. First, telomere dysfunction suppresses tumor progression by the activation of DNA damage checkpoints, which induce cell cycle arrest (senescence) or apoptosis, as well as by inducing metabolic compromise and activation of immune responses directed against senescent cells. Second, telomere dysfunction promotes tumorigenesis by inducing chromosomal instability in tumor initiating cells, by inhibiting proliferative competition of non-transformed cells, and possibly, also by influencing tumor cell plasticity. The tumor promoting effects of telomere dysfunction are context dependent and require the loss of p53-dependent DNA damage checkpoints or other genetic modifiers that attenuate DNA damage responses possibly involving complex interactions of different genes. The activation of telomere stabilizing mechanisms appears as a subsequent step, which is required to enable immortal grotwh of emerging cancer cells. Here, we conceptually discuss our current knowledge and new, unpublished experimental data on telomere dependent influences on tumor initiation and progression.