A hallmark of Listeria (L.) monocytogenes pathogenesis is bacterial escape from maturing entry vacuoles, which is required for rapid bacterial replication in the host cell cytoplasm and cell-to-cell spread. The bacterial transcriptional activator PrfA controls expression of key virulence factors that enable exploitation of this intracellular niche. The transcriptional activity of PrfA within infected host cells is controlled by allosteric coactivation. Inhibitory occupation of the coactivator site has been shown to impair PrfA functions, but consequences of PrfA inhibition for L. monocytogenes infection and pathogenesis are unknown. Here we report the crystal structure of PrfA with a small molecule inhibitor occupying the coactivator site at 2.0 Å resolution. Using molecular imaging and infection studies in macrophages, we demonstrate that PrfA inhibition prevents the vacuolar escape of L. monocytogenes and enables extensive bacterial replication inside spacious vacuoles. In contrast to previously described spacious Listeria-containing vacuoles, which have been implicated in supporting chronic infection, PrfA inhibition facilitated progressive clearance of intracellular L. monocytogenes from spacious vacuoles through lysosomal degradation. Thus, inhibitory occupation of the PrfA coactivator site facilitates formation of a transient intravacuolar L. monocytogenes replication niche that licenses macrophages to effectively eliminate intracellular bacteria. Our findings encourage further exploration of PrfA as a potential target for antimicrobials and highlight that intra-vacuolar residence of L. monocytogenes in macrophages is not inevitably tied to bacterial persistence.