Fanconi anemia and Bloom syndrome are genomic instability syndromes caused by mutations in proteins that participate in overlapping DNA repair and replication pathways. Here, we show that the monoubiquitinated form of the Fanconi Anemia protein FANCD2 acts in opposition to the BLM DNA helicase to restrain telomere replication and recombination in human cells that utilize the Alternative Lengthening of Telomeres (ALT) pathway. ALT relies on exchanges of telomeric DNA to maintain telomeres, a process that we show FANCD2 suppresses. Depletion of FANCD2 results in a hyper-ALT phenotype, including an increase in extrachromosomal telomeric repeat DNAs, putative recombinational byproducts that we show exist as intertwined complexes forming the nucleic acid component of ALT-associated PML bodies. Increases in telomeric DNA are suppressed by loss of BLM but not RAD51, occur without parallel upregulation of shelterin proteins TRF1 and TRF2, and are associated with increased frequencies of deprotected and fragile telomeres. Inactivation of the FA pathway does not trigger ALT, as FANCD2 depleted telomerase positive cells do not acquire ALT-like phenotypes. We observe frequent fragile telomeres in ALT cells, suggesting that telomere sequences are prone to replication problems. We propose that, in ALT cells, FANCD2 promotes intramolecular resolution of stalled replication forks in telomeric DNA while BLM facilitates their resection and subsequent involvement in the intermolecular exchanges that drive ALT.