Innate immunity responds to pathogens by producing alarm signals and activating pathways that make host cells inhospitable for pathogen replication. The intracellular bacterium Burkholderia thailandensis invades the cytosol, hijacks host actin, and induces cell fusion to spread to adjacent cells, forming multinucleated giant cells (MNGCs) which promote bacterial replication. We show that type I interferon (IFN) restricts macrophage MNGC formation during B. thailandensis infection. Guanylate-binding proteins (GBPs) expressed downstream of type I IFN were required to restrict MNGC formation through inhibition of bacterial Arp2/3-dependent actin motility during infection. GTPase activity and the CAAX prenylation domain were required for GBP2 recruitment to B. thailandensis, which restricted bacterial actin polymerization required for MNGC formation. Consistent with the effects in in vitro macrophages, Gbp2-/-, Gbp5-/-, GbpChr3-KO mice were more susceptible to intranasal infection with B. thailandensis than wildtype mice. Our findings reveal that IFN and GBPs play a critical role in restricting cell-cell fusion and bacteria-induced pathology during infection.