AbstractTelomerase-free cancer cells employ a recombination-based alternative lengthening of telomeres (ALT) pathway that depends on ALT-associated promyelocytic leukemia (PML) nuclear bodies (APBs), whose function is unclear. We find that APBs behave as liquid condensates, suggesting two potential mechanisms to promote telomere elongation: condensation to enrich DNA repair factors for telomere synthesis and coalescence to cluster telomeres to provide repair templates. Using chemically-induced dimerization, we show that telomere sumoylation nucleates APB condensation via SUMO-SIM (SUMO interaction motif) interactions and clusters telomeres. The induced APBs lack DNA repair factors, indicating that these factors are clients recruited to the APB scaffold rather than components that drive condensation. Telomere clustering, however, relies only on liquid properties of the condensate, as an alternative condensation chemistry also induces clustering. Our results demonstrate how the material properties and chemical composition of APBs independently contribute to ALT, suggesting a general framework for how liquid condensates promote cellular functions.