Coronavirus disease 2019 (COVID-19) is caused by SARS-CoV-2 and has spread across the globe. SARS-CoV-2 is a highly infectious virus with no vaccine or antiviral therapy available to control the pandemic; therefore, it is crucial to understand the mechanisms of viral pathogenesis and the host immune responses to SARS-CoV-2. SARS-CoV-2 is a new member of the betacoronavirus genus like other closely related viruses including SARS-CoV and Middle East respiratory syndrome coronavirus (MERS-CoV). Both SARS-CoV and MERS-CoV have caused serious outbreaks and epidemics in the past eighteen years. Here, we report that one of the interferon-stimulated genes (ISGs), cholesterol 25-hydroxylase (CH25H), is induced by SARS-CoV-2 infection in vitro and in COVID-19-infected patients. CH25H converts cholesterol to 25-hydrocholesterol (25HC) and 25HC shows broad anti-coronavirus activity by blocking membrane fusion. Furthermore, 25HC inhibits USA-WA1/2020 SARS-CoV-2 infection in lung epithelial cells and viral entry in human lung organoids. Mechanistically, 25HC inhibits viral membrane fusion by activating the ER-localized acyl-CoA:cholesterol acyltransferase (ACAT) which leads to the depletion of accessible cholesterol from the plasma membrane. Altogether, our results shed light on a potentially broad antiviral mechanism by 25HC through depleting accessible cholesterol on the plasma membrane to suppress virus-cell fusion. Since 25HC is a natural product with no known toxicity at effective concentrations, it provides a potential therapeutic candidate for COVID-19 and emerging viral diseases in the future.