Progressive telomere attrition or deficiency of the protective shelterin complex elicits a DNA damage response as a result of a cell's inability to distinguish dysfunctional telomeric ends from DNA double-strand breaks. SNMIB/Apollo is a shelterin-associated protein and a member of the SMN1/PSO2 nuclease family that localizes to telomeres through its interaction with TRF2. Here, we generated SNMIB/Apollo knockout mouse embryo fibroblasts (MEFs) to probe the function of SNMIB/Apollo at mammalian telomeres. SNMIB/Apollo null MEFs exhibit an increased incidence of G2 chromatid-type fusions involving telomeres created by leading-strand DNA synthesis, reflective of a failure to protect these telomeres after DNA replication. Mutations within SNMIB/Apollo's conserved nuclease domain failed to suppress this phenotype, suggesting that its nuclease activity is required to protect leading-strand telomeres. SNMIB/Apollo(-/-)ATM(-/-) MEFs display robust telomere fusions when Trf2 is depleted, indicating that ATM is dispensable for repair of uncapped telomeres in this setting. Our data implicate the 5'-3' exonuclease function of SNM1B/Apollo in the generation of 3' single-stranded overhangs at newly replicated leading-strand telomeres to protect them from engaging the non-homologous end-joining pathway.