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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. Author summary Listeria monocytogenes is a bacterial pathogen that causes severe, often fatal disease in vulnerable individuals. Listeria monocytogenes infects host cells, where it needs to escape from its entry vacuole to replicate inside the host cell cytoplasm and spread to neighboring cells. Inability of Listeria to escape from vacuoles has been associated with long-term bacterial survival inside infected immune cells and chronic infection. We discovered that inhibition of the master regulator of the bacterial factors that orchestrate the intracellular lifestyle of Listeria monocytogenes traps the bacteria inside their entry vacuoles and facilitates extensive bacterial replication in spacious vacuoles. Yet, the majority of infected host immune cells survive the infection and ultimately clear the bacteria. Thus, our data demonstrate that intra-vacuolar existence of Listeria monocytogenes in immune cells is not inevitably tied to bacterial persistence and chronic infection. We provide high resolution structural insights into how an effective inhibitory molecule interacts with the master regulator of Listeria virulence, which may be exploited for rational drug design.