Previous reports have shown that expression of BARD1δ, a deletion-bearing isoform of BARD1, correlates with tumor aggressiveness and progression. We show that expression of BARD1δ induces cell cycle arrest in vitro and in vivo in non-malignant cells. We investigated the mechanism that leads to proliferation arrest and found that BARD1δ overexpression induced mitotic arrest with chromosome and telomere aberrations in cell cultures, in transgenic mice, and in cells from human breast and ovarian cancer patients with BARD1 mutations. BARD1δ binds more efficiently than BARD1 to telomere binding proteins and causes their depletion from telomeres, leading to telomere and chromosomal instability. While this induces cell cycle arrest, cancer cells lacking G2/M checkpoint controls might continue to proliferate despite the BARD1δ-induced chromosomal instability. These features of BARD1δ may make it a genome permutator and a driver of continuous uncontrolled proliferation of cancer cells.