Club cells (Clara cells) participate in bronchiolar wound repair and regeneration. Located in the bronchioles, they become activated during alveolar injury in idiopathic pulmonary fibrosis (IPF) and migrate into the affected alveoli, a process called alveolar bronchiolisation. The purpose of this migration and the role of club cells in alveolar wound repair is controversial. This study was undertaken to investigate the role of club cells in alveolar epithelial wound repair and pulmonary fibrosis. A direct-contact co-culture in vitro model was used to evaluate the role of club cells (H441 cell line) on alveolar epithelial cell (A549 cell line) and small airway epithelial cell (SAEC) wound repair. Immunohistochemistry was conducted on lung tissue samples from patients with IPF to replicate the in vitro findings ex vivo. Our study demonstrated that club cells induce apoptosis in alveolar epithelial cells and SAECs through a tumour necrosis factor-related apoptosis-inducing ligand (TRAIL)-dependent mechanism resulting in significant inhibition of wound repair. Furthermore, in IPF lungs, TRAIL-expressing club cells were detected within the affected alveolar epithelia in areas of established fibrosis, together with widespread alveolar epithelial cell apoptosis. From these findings, we hypothesise that the extensive pro-fibrotic remodelling associated with IPF could be driven by TRAIL-expressing club cells inducing apoptosis in alveolar epithelial cells through a TRAIL-dependent mechanism.