Immune and inflammation dysregulation have been associated with the aging process and contribute to age-related disorders, but the underlying mechanism remains elusive. Here, we employed late-generation Terc knockout (Terc(-/-)) mice to investigate the impact of telomere dysfunction on the host defense and function of innate immune cells. Terc(-/-) mice displayed exaggerated lung inflammation and increased mortality upon respiratory staphylococcal infection, although their pathogen-clearing capacity was uncompromised. Mechanistically, we found that telomere dysfunction caused macrophage mitochondrial abnormality, oxidative stress, and hyperactivation of the NLRP3 inflammasome. The ubiquitin-editing enzyme TNFAIP3, together with PGC-1 alpha, was critically involved in the regulation of mitochondrial and inflammatory gene expression and essential for the homeostatic role of telomeres. Together, the study reveals a regulatory paradigm that connects telomeres to mitochondrial metabolism, innate immunity, and inflammation, shedding light on age-related pathologies.