Here, Argonaute from the prokaryote Thermus thermophilus is shown to use small DNA guides to interfere directly with invading foreign DNA, rather than being involved in RNA-guided RNA interference, as observed in eukaryotes. One function of RNA interference (RNAi) in eukaryotes is to protect the cell from foreign small single-stranded RNA (ssRNAs) through a process in which short RNAs encoded by the host bind homologous RNA targets and mediate their degradation. Argonaute (Ago) is a key enzyme of RNA-guided RNAi pathways in eukaryotes; many prokaryotes also possess Ago-encoding genes, but their physiological role has remained unknown. John van der Oost and colleagues now show that prokaryotic Ago — from the bacterium Thermus thermophilus — protects the cell against invasion by foreign DNA, rather than RNA. In this case, Ago is loaded with small interfering DNAs similar to those derived from plasmid DNA, which bind and cleave complementary DNAs. RNA interference is widely distributed in eukaryotes and has a variety of functions, including antiviral defence and gene regulation1,2. All RNA interference pathways use small single-stranded RNA (ssRNA) molecules that guide proteins of the Argonaute (Ago) family to complementary ssRNA targets: RNA-guided RNA interference1,2. The role of prokaryotic Ago variants has remained elusive, although bioinformatics analysis has suggested their involvement in host defence3. Here we demonstrate that Ago of the bacterium Thermus thermophilus (TtAgo) acts as a barrier for the uptake and propagation of foreign DNA. In vivo, TtAgo is loaded with 5′-phosphorylated DNA guides, 13–25 nucleotides in length, that are mostly plasmid derived and have a strong bias for a 5′-end deoxycytidine. These small interfering DNAs guide TtAgo to cleave complementary DNA strands. Hence, despite structural homology to its eukaryotic counterparts, TtAgo functions in host defence by DNA-guided DNA interference.