The accidental human pathogen Legionella pneumophila (Lp) is the etiological agent for a severe atypical pneumonia known as Legionnaires’ disease. In human infections and animal models of disease alveolar macrophages are the primary cellular niche that supports bacterial replication within a unique intracellular membrane-bound organelle. The Dot/Icm apparatus—a type IV secretion system that translocates ~300 bacterial proteins within the cytosol of the infected cell—is a central virulence factor required for intracellular growth. Mutant strains lacking functional Dot/Icm apparatus are transported to and degraded within the lysosomes of infected macrophages. The early foundational work from Dr. Horwitz’s group unequivocally established that Legionella does not replicate extracellularly during infection—a phenomenon well supported by experimental evidence for four decades. Our data challenges this paradigm by demonstrating that macrophages and monocytes provide the necessary nutrients and support robust Legionella extracellular replication. We show that the previously reported lack of Lp extracellular replication is not a bacteria intrinsic feature but rather a result of robust restriction by serum-derived nutritional immunity factors. Specifically, the host iron-sequestering protein Transferrin is identified here as a critical suppressor of Lp extracellular replication in an iron-dependent manner. In iron-overload conditions or in the absence of Transferrin, Lp bypasses growth restriction by IFNγ-primed macrophages though extracellular replication. It is well established that certain risk factors associated with development of Legionnaires’ disease, such as smoking, produce a chronic pulmonary environment of iron-overload. Our work indicates that iron-overload could be an important determinant of severe infection by allowing Lp to overcome nutritional immunity and replicate extracellularly, which in turn would circumvent intracellular cell intrinsic host defenses. Thus, we provide evidence for nutritional immunity as a key underappreciated host defense mechanism in Legionella pathogenesis.