Telomeres serve as protective caps that help the cell differentiate between the naturally occurring ends of chromosomes and double-stranded breaks. When telomere capping function becomes compromised, chromosome ends are subjected to elevated rates of chromosome alterations. These effects can be particularly dramatic in the telomere-adjacent subtelomeric region. While the catastrophic impact of severe telomere dysfunction on genome stability has been well documented, the adaptive telomere failure hypothesis considers an alternative role telomere dysfunction may play in adaptive evolution. This hypothesis suggests that low levels of telomere failure, induced by certain environmental stresses, can lead to elevated subtelomeric recombination. Mutational loss, duplication, or modification of subtelomeric contingency genes could ultimately facilitate adaptation by generating novel mutants better able to survive environmental stress. In this perspective, we discuss recent work that examined mild telomere dysfunction and its role in altering the adaptive potential of subtelomeric genes.