Type I alveolar epithelial cells are a replicative niche for influenza in vivo, yet their response to infection is not fully understood. To better characterize their cellular responses, we have created an immortalized murine lung epithelial type I cell line (LET1). These cells support spreading influenza virus infection in the absence of exogenous protease and thus permit simultaneous analysis of viral replication dynamics and host cell responses. LET1 cells can be productively infected with human, swine and mouse-adapted strains of influenza virus and exhibit expression of an antiviral transcriptional programme and robust cytokine secretion. We characterized influenza virus replication dynamics and host responses of lung type I epithelial cells and identified the capacity of epithelial cell-derived type I IFN to regulate specific modules of antiviral effectors to establish an effective antiviral state. Together, our results indicate that the type I epithelial cell can play a major role in restricting influenza virus infection without contribution from the haematopoietic compartment.