The subtelomere is an unusual region of the genome that has a complex repetitive structure, undergoes increased homologous recombination, and experiences rapid sequence evolution. While this instability makes the subtelomere a poor location for essential genes, it may be an ideal location for genes that can tolerate or even benefit from frequent mutations. Interestingly, subtelomeres are often enriched for contingency genes. Sequence changes within these loci, such as gene duplications, tandem repeat expansion and deletion, and chimeric gene formation, have been shown to confer fitness advantages in novel environments. While it is clear subtelomeres are important for rapid adaptation, the cellular mechanisms responsible for such events are unclear. The Adaptive Telomere Failure hypothesis proposes that telomeres play a direct role in triggering subtelomeric evolution that can result in rapid adaptation to novel environments. Telomeres with dysfunctional capping can stimulate double-stranded break repair events that spread into the adjacent subtelomeric sequence and genes. This can result in mutations in subtelomeric contingency genes that may be advantageous for adaptation to novel environments. The central hypothesis of my dissertation is that telomere dysfunction incites subtelomeric evolution that can cause rapid adaptation to novel environments in the yeast Kluyveromyces lactis. This work tested a key prediction of the Adaptive Telomere Failure hypothesis, namely, that mild telomere dysfunction is capable of significantly elevating recombination rates within subtelomeric genes. Naturally occurring K. lactis subtelomeric genes linked to lactose utilization, flocculation, and arsenate resistance were examined for mutations leading to significantly altered phenotypes in the presence of mild telomere dysfunction. Results indicate that mild telomere dysfunction can lead to increased levels of break-induced replication (BIR) events within the subtelomeric region leading to terminal duplications within the subtelomere. A second class of mutations that did not experience any major rearrangements was also identified. These events were shown to specifically affect the lactose utilization genes and to a lesser extent the genes involved in flocculation and arsenate resistance. These results suggest that mild telomere dysfunction can lead to a subtelomeric mutational profile distinct from those detected in strains with severe telomere dysfunction.