Replicative senescence occurs in response to shortened telomeres and is triggered by ATM and TP53-mediated DNA damage signaling that blocks replication. hTERT lengthens telomeres, which is thought to block damage signaling and the onset of senescence. We find that normal diploid fibroblasts expressing hTERT mutants unable to maintain telomere length do not initiate DNA damage signaling and continue to replicate, despite having telomeres shorter than senescent cells. The TRF1 and TRF2 DNA binding proteins of the shelterin complex stabilize telomeres, and we find that expression of different mutant hTERT proteins decreases levels of the Siah1 E3 ubiquitin ligase that targets TRF2 to the proteasome, by increasing levels of the CDC20 and FBXO5 E3 ligases that target Siah1. This restores the TRF2:TRF1 ratio to block the activation of ATM and subsequent activation of TP53 that is usually associated with DNA damage-induced senescence signaling. All hTERT variants reduce DNA damage signaling, and this occurs concomitantly with telomeres assuming a more compact, denser conformation than senescent cells as measured by super-resolution microscopy. This indicates that hTERT variants induce TRF2-mediated telomere compaction that is independent of telomere length, and it plays a dominant role in regulating the DNA damage signaling that induces senescence and blocks replication of human fibroblasts. These observations support the idea that very short telomeres often seen in cancer cells may fail to induce senescence due to selective stabilization of components of the shelterin complex, increasing telomere density, rather than maintaining telomere length via the reverse transcriptase activity of hTERT.