The type I interferon (IFN) signaling pathway has important functions in resistance to viral infection, with the downstream induction of interferon stimulated genes (ISG) protecting the host from virus entry, replication and spread. Listeria monocytogenes (Lm), a facultative intracellular foodborne pathogen, can exploit the type I IFN response as part of their pathogenic strategy, but the molecular mechanisms involved remain unclear. Here we show that type I IFN suppresses the antibacterial activity of phagocytes to promote systemic Lm infection. Mechanistically, type I IFN suppresses phagosome maturation and proteolysis of Lm virulence factors ActA and LLO, thereby promoting phagosome escape and cell-to-cell spread; the antiviral protein, IFN-induced transmembrane protein 3 (IFITM3), is required for this type I IFN-mediated alteration. Ifitm3−/− mice are resistant to systemic infection by Lm, displaying decreased bacterial spread in tissues, and increased immune cell recruitment and pro-inflammatory cytokine signaling. Together, our findings show how an antiviral mechanism in phagocytes can be exploited by bacterial pathogens, and implicate IFITM3 as a potential antimicrobial therapeutic target.