Mammalian telomeres contain a duplex TTAGGG‐repeat tract terminating in a 3′ single‐stranded overhang. TRF2 protein has been implicated in remodeling telomeres into duplex lariats, termed t‐loops, in vitro and t‐loops have been isolated from cells in vivo. To examine the features of the telomeric DNA essential for TRF2‐promoted looping, model templates containing a 500 bp double‐stranded TTAGGG tract and ending in different single‐stranded overhangs were constructed. As assayed by electron microscopy, looped molecules containing most of the telomeric tract are observed with TRF2 at the loop junction. A TTAGGG‐3′ overhang of at least six nucleotides is required for loop formation. Termini with 5′ overhangs, blunt ends or 3′ termini with non‐telomeric sequences at the junction are deficient in loop formation. Addition of non‐telomeric sequences to the distal portion of a 3′ overhang beginning with TTAGGG repeats only modestly diminishes looping. TRF2 preferentially localizes to the junction between the duplex repeats and the single‐stranded overhang. Based on these findings we suggest a model for the mechanism by which TRF2 remodels telomeres into t‐loops.