R loops are an important source of genome instability largely due to its negative impact on replication progression. Yra1/ALY is an abundant RNA-binding factor conserved from yeast to humans and required for mRNA export, but its excess cause lethality and genome instability. Here, we show that Yra1 binds RNA-DNA hybrids in vitro and when artificially overexpressed is recruited to chromatin in an RNA-DNA hybrid-dependent manner stabilizing R loops and converting them into replication obstacles in vivo. Importantly, excess of Yra1 increases R loop-mediated genome instability caused by transcription-replication collisions regardless of whether they are co-directional or head-on. It also induces telomere shortening and senescence, consistent with a defect in telomere replication. Our results indicate that R loops form transiently in cells regardless of replication and, after stabilization by excess Yra1, they compromise genome integrity, in agreement with a two-step model of R loop-mediated genome instability. This work opens new perspectives to understand transcription-associated genome instability in repair-deficient cells, including tumoral cells. Overall design: RNA:DNA hybrid immunoprecipitation sequencing (DRIP-seq) in wild-type yeast cells