Interferons (IFN) are essential antiviral cytokines that establish the cellular antiviral state through upregulation of hundreds of interferon-stimulated genes (ISGs), most of which have uncharacterized functions and mechanisms. We identified Cholesterol-25-hydroxylase (Ch25h) as an antiviral ISG that can convert cholesterol to a soluble antiviral factor, 25-hydroxycholesterol (25HC). Ch25h expression or 25HC treatment in cultured cells broadly inhibits enveloped viruses including VSV, HSV, HIV, and MHV68 as well as acutely pathogenic EBOV, RVFV, RSSEV, and Nipah viruses under BSL4 conditions. As a soluble oxysterol, 25HC inhibits viral entry by blocking membrane fusion between virus and cell. In animal models, Ch25h-knockout mice were more susceptible to MHV68 lytic infection. Moreover, administration of 25HC in humanized mice suppressed HIV replication and rescued T-cell depletion. Thus, our studies demonstrate a unique mechanism by which IFN achieves its antiviral state through the production of a natural oxysterol to inhibit viral entry and implicate membrane-modifying oxysterols as potential antiviral therapeutics.