Telomere biology disorders (TBD) are inherited diseases caused by genetic defects in telomere maintenance. Patients with TBD have critically shortened telomeres, leading to bone marrow failure (BMF) and an increased risk of myeloid neoplasms (MN). We conducted a study to understand the genetic changes driving clonal evolution in TBD patients and their distinct mechanisms compared to normal aging and sporadic myelodysplastic syndrome (MDS). We analyzed acquired genetic alterations in hematopoietic cells from 105 TBD patients. The diagnosis of TBD was made using a combination of clinical history, germline mutation status, and telomere length. Germline mutations were identified in 84% of patients, a family history consistent with TBD was seen in 46%, and 76% of patients had lymphocyte telomere lengths (TL) <1st %ile for their age, while 22% fell between the 1st and 10th %ile. Complications observed in our cohort included BMF (42%), myeloid neoplasms (17%), solid tumors (17%), cirrhosis (14%), and interstitial lung disease (34%). Clonal hematopoiesis was detected in 44 of 105 patients (42%), including 8 of 27 (30%) patients 18 years or younger. Somatic genetic alterations primarily involved the DNA damage response (DDR) pathway, with ATM and TP53 being the most frequently mutated genes (11 ATM mutations in 5 of 80 patients; 5 TP53 mutations in 4 of 84 patients; Fig. 1). Mutations typical of age-related clonal hematopoiesis were seen in 4 patients (3 ASXL1, 1 TET2). Somatic reversion of TBD germline lesions was found in 7 patients. Additionally, 11 somatic mutations were detected in genes involved in DDR, telomere maintenance, and cell senescence, including KAT6B, PALB2, TELO2, TOP1, and RTEL1. MDS-associated gene mutations were found in 15 patients (18%), 8 in the setting of MN. The most common mutations affected spliceosome genes with U2AF1 p.S34F and SF3B1 being most notable, including 1 U2AF1 S34F identified in a 15-year-old. Mutations in NPM1, RUNX1, WT1, SF3B1, and FLT3 were identified only after malignant transformation. Acquired cytogenetic changes were observed in 16 of 87 evaluable patients (18%), 8 in the setting of MN, and included gain of 1q in 5 patients (5.7%). Two patients with TP53 mutations developed a complex karyotype (Fig 1). To understand selective pressures contributing to clonal hematopoiesis development in TBD, we analyzed transcriptional changes in bone marrow (n=2) and peripheral blood (n=1) mononuclear cells (MNCs) of 3 TBD patients with different germline lesions using single cell RNA sequencing (scRNASeq). MNCs from TBD patients exhibited significant differences compared to healthy controls, showing downregulation of MYC targets, reduced translation, cell cycle arrest, and upregulation of ATM-dependent DDR pathway and FAS pathway (Fig 2). We hypothesized that mutations in DDR pathway genes, particularly somatic ATM loss, enable TBD hematopoietic stem and progenitor cells to overcome telomere-induced DDR induction and premature senescence. Consistent with our hypothesis, low dose ATM inhibition in TBD patients' fibroblasts significantly enhanced growth rate of TERC-mutated and DKC1-mutated cells, whereas control fibroblasts were unaffected. Somatic mutations in ATM in our cohort were typically observed in patients with TERC-mutated TBD (3 of 5, 3 of 34 with TERC-mutated TBD), very low TL, and extra-hematopoietic manifestations. Of the 11 ATM mutations, 3 were predicted loss of function and 4 were missense kinase domain mutations, known or predicted to result in loss of kinase activity. Somatic ATM loss occurred both as heterozygous or compound heterozygous mutations. The development of ATM mutations alone was not causative of malignancy; however, 2 patients with somatic ATM mutations developed myeloid neoplasms after acquisition of additional mutations (subclonal mutation in NPM1 in one patient and clonal replacement with a TP53-mutant clone in another patient). In conclusion, our findings highlight the role of telomere dysfunction-induced DDR and cellular senescence in bone marrow failure and clonal selection in TBD. ATM loss selectively enhances growth of TBD cells by inhibiting DDR activation which may ameliorate marrow failure but has the potential to increase the risk of myeloid neoplasms after acquisition of additional genetic events. Future studies should explore the possibility of a therapeutic window involving very low doses of ATM inhibition in TBD.