A screen to detect yeast mutants that frequently lost expression of subtelomeric genes identified two mutations in PIF1, a gene known to encode a 5' to 3' DNA helicase. The loss of expression of subtelomeric genes in pif1 cells was due to deletion of the subtelomeric regions of the chromosomes and the generation of new telomeres at proximal sites. In pif1 mutants, de novo telomere formation usually occurred at sites with very little homology to telomeric DNA. De novo telomere formation after HO-induced chromosome breakage also occurred at elevated frequencies in pif1 cells. Moreover, mutations in PIF1 caused all telomeres to lengthen. These results suggest that the PIF1 helicase is an inhibitor of both de novo telomere formation and telomere elongation.