In many eukaryotes, Argonaute proteins, guided by short RNA sequences, defend cells against transposons and viruses. In the eubacterium Thermus thermophilus, the DNA-guided Argonaute TtAgo defends against transformation by DNA plasmids. Here, we report that TtAgo also participates in DNA replication. In vivo, TtAgo binds 15- to 18-nt DNA guides derived from the chromosomal region where replication terminates and associates with proteins known to act in DNA replication. When gyrase, the sole T. thermophilus type II topoisomerase, is inhibited, TtAgo allows the bacterium to finish replicating its circular genome. In contrast, loss of gyrase and TtAgo activity slows growth and produces long sausage-like filaments in which the individual bacteria are linked by DNA. Finally, wild-type T. thermophilus outcompetes an otherwise isogenic strain lacking TtAgo. We propose that the primary role of TtAgo is to help T. thermophilus disentangle the catenated circular chromosomes generated by DNA replication.