Saccharomyces cerevisiae Tel1 is the ortholog of human ATM kinase and initiates a cell cycle checkpoint in response to dsDNA breaks (DSBs). Tel1ATM kinase is activated synergistically by naked dsDNA and the Mre11-Rad50-Xrs2NBS1 complex (MRX). A multisubunit protein complex, which is related to human shelterin, protects telomeres from being recognized as DSBs, thereby preventing a Tel1ATM checkpoint response. However, at very short telomeres, Tel1ATM can be recruited and activated by the MRX complex, resulting in telomere elongation. Conversely, at long telomeres, Rap1-interacting-factor 2 (Rif2) is instrumental in suppressing Tel1 activity. Here, using an in vitro reconstituted Tel1 kinase activation assay, we show that Rif2 inhibits MRX-dependent Tel1 kinase activity. Rif2 discharges the ATP-bound form of Rad50, which is essential for all MRX-dependent activities. This conclusion is further strengthened by experiments with a Rad50 allosteric ATPase mutant that maps outside the conserved ATP binding pocket. We propose a model in which Rif2 attenuates Tel1 activity at telomeres by acting directly on Rad50 and discharging its activated ATP-bound state, thereby rendering the MRX complex incompetent for Tel1 activation. These findings expand our understanding of the mechanism by which Rif2 controls telomere length.