Telomeres protect chromosome ends from being recognized as sites of DNA damage. Upon telomere shortening or telomere uncapping induced by loss of telomeric repeat-binding factor 2 (TRF2), telomeres elicit a DNA-damage response leading to cellular senescence. Here, we show that following TRF2 depletion, the levels of the long noncoding RNA TERRA increase and LSD1, which binds TERRA, is recruited to telomeres. At uncapped telomeres, LSD1 associates with MRE11, one of the nucleases implicated in the processing of 3' telomeric G overhangs, and we show that LSD1 is required for efficient removal of these structures. The LSD1-MRE11 interaction is reinforced in vivo following TERRA upregulation in TRF2-deficient cells and in vitro by TERRA-mimicking RNA oligonucleotides. Furthermore, LSD1 enhances the nuclease activity of MRE11 in vitro. Our data indicate that recruitment of LSD1 to deprotected telomeres requires MRE11 and is promoted by TERRA. LSD1 stimulates MRE11 catalytic activity and nucleolytic processing of uncapped telomeres.