The genome consists of non-B-DNA structures such as G-quadruplexes (G4) that are involved in the regulation of genome stability and transcription. Telomeric-repeat containing RNA (TERRA) is capable of folding into G-quadruplex and interacting with chromatin remodeler ATRX. Here we show that TERRA modulates ATRX occupancy on repetitive sequences and over genes, and maintains DNA G-quadruplex structures at TERRA target and non-target sites in mouse embryonic stem cells. TERRA prevents ATRX from binding to subtelomeric regions and represses H3K9me3 formation. G4 ChIP-seq reveals that G4 abundance decreases at accessible chromatin regions, particularly at transcription start sites (TSS) after TERRA depletion; such G4 reduction at TSS is associated with elevated ATRX occupancy and differentially expressed genes. Loss of ATRX alleviates the effect of gene repression caused by TERRA depletion. Immunostaining analyses demonstrate that knockdown of TERRA diminishes DNA G4 signals, whereas silencing ATRX elevates G4 formation. Our results uncover an epigenetic regulation by TERRA that sequesters ATRX and preserves DNA G4 structures.