Respiratory Syncytial Virus (RSV) is the leading cause of acute lower respiratory infections in young children and infection has been linked to the development of persistent lung disease in the form of wheezing and asthma. Despite substantial research efforts, there are no RSV vaccines currently available and an effective monoclonal antibody targeting the RSV fusion protein (palivizumab) is of limited general use given the associated expense. Therefore, the development of novel approaches to prevent RSV infection is highly desirable to improve pediatric health globally. We have developed a method to generate alveolar-like macrophages (ALMs) from pluripotent stem cells. These ALMs have shown potential to promote airway innate immunity and tissue repair and so we hypothesized that ALMs could be used as a strategy to prevent RSV infection. Here, we demonstrate that ALMs are not productively infected by RSV and prevent the infection of epithelial cells. Prevention of epithelial infection was mediated by two different mechanisms: phagocytosis of RSV particles and release of an antiviral soluble factor different from type I interferon. Furthermore, intratracheal administration of ALMs protected mice from subsequent virus-induced weight loss and decreased lung viral titres and inflammation, indicating that ALMs can impair the pathogenesis of RSV infection. Our results support a prophylactic role for ALMs in the setting of RSV infection and warrant further studies on stem cell-derived ALMs as a novel cell-based therapy for pulmonary viral infections.