Alternative Lengthening of Telomeres (ALT) utilizes a recombination mechanism and break-induced DNA synthesis to maintain telomere length without telomerase, but it is unclear how cells initiate ALT. TERRA, telomeric repeat-containing RNA, forms RNA:DNA hybrids (R-loops) at ALT telomeres. We show that depleting TERRA using an RNA-targeting Cas9 system reduces ALT-associated PML bodies, telomere clustering, and telomere lengthening. TERRA interactome reveals that TERRA interacts with an extensive subset of DNA repair proteins in ALT cells. One of TERRA interacting proteins, the endonuclease XPF, is highly enriched at ALT telomeres and recruited by telomeric R-loops to induce DNA damage response (DDR) independent of CSB and SLX4, and thus triggers break-induced telomere synthesis and lengthening. The attraction of BRCA1 and RAD51 at telomeres requires XPF in FANCM-deficient cells that accumulate telomeric R-loops. Our results suggest that telomeric R-loops activate DDR via XPF to promote homologous recombination and telomere replication to drive ALT.