To disable telemetry data collection in Next.js, run the command `npx next telemetry disable` at the root of your project, or set an environment variable `NEXT_TELEMETRY_DISABLED=1`. This will prevent the collection of anonymous usage data, including information about CLI commands invoked, version of Next.js used, operating system, and plugins used in the project. The status of telemetry data collection can be checked using the command `npx next telemetry status`. A starter application is also provided to try out this feature.