Repetitive DNA is prone to replication fork stalling, which can lead to genome instability. Here, we find that replication fork stalling at telomeres leads to the formation of t-circle-tails, a new extrachromosomal structure that consists of circular telomeric DNA with a single-stranded tail. Structurally, the t-circle-tail resembles cyclized leading or lagging replication intermediates that are excised from the genome by topoisomerase II-mediated cleavage. We also show that the DNA damage repair machinery NHEJ is required for the formation of t-circle-tails and for the resolution of stalled replication forks, suggesting that NHEJ, which is normally constitutively suppressed at telomeres, is activated in the context of replication stress. Inhibition of NHEJ or knockout of DNA-PKcs impairs telomere replication, leading to multiple-telomere sites (MTS) and telomere shortening. Collectively, our results support a "looping-out" mechanism, in which the stalled replication fork is cut out and cyclized to form t-circle-tails, and broken DNA is religated. The telomere loss induced by replication stress may serve as a new factor that drives replicative senescence and cell aging.