The protozoan parasite Toxoplasma gondii triggers severe small intestinal immunopathology characterized by IFN-γ- and intestinal microbiota-mediated inflammation, Paneth cell loss, and bacterial dysbiosis. Paneth cells are a prominent secretory epithelial cell type that resides at the base of intestinal crypts and releases antimicrobial peptides. We demonstrate that the microbiota triggers basal Paneth cell-specific autophagy via induction of IFN-γ, a known trigger of autophagy, to maintain intestinal homeostasis. Deletion of the autophagy protein Atg5 specifically in Paneth cells results in exaggerated intestinal inflammation characterized by complete destruction of the intestinal crypts resembling that seen in pan-epithelial Atg5-deficient mice. Additionally, lack of functional autophagy in Paneth cells within intestinal organoids and T. gondii-infected mice causes increased sensitivity to the proinflammatory cytokine TNF along with increased intestinal permeability, leading to exaggerated microbiota- and IFN-γ-dependent intestinal immunopathology. Thus, Atg5 expression in Paneth cells is essential for tissue protection against cytokine-mediated immunopathology during acute gastrointestinal infection.