Telomeres are prone to damage inflicted by reactive oxygen species (ROS). Oxidized telomeric DNA and nucleotide substrates inhibit telomerase, causing telomere shortening. In addition, ROS can induce telomeric single-strand DNA breaks (SSBs). The peroxiredoxin-PRDX1 is enriched in telomeric chromatin and this counteracts ROS-induced telomere damage. Here, we identify DNA processing after oxidative stress as a main source of telomeric DNA cleavage events in the absence of PRDX1. In PRDX1-depleted cells, poly(ADP-ribose) polymerase (PARP)-dependent telomeric repair is often incomplete, giving persistent SSBs that are converted into telomeric double-strand breaks during replication, leading to rapid telomere shortening. Interestingly, PARP1 inhibition dampens telomere shortening, triggering stabilization of the homologous recombination (HR) factor BRCA1 and RAD51-mediated repair of telomeres. Overall, our results reveal that, in the absence PRDX1, incomplete PARP1-dependent DNA repair and competition between PARP1 and HR cause ROS-induced telomeric catastrophe.