Mucosal surfaces are under constant bombardment from potentially antigenic particles and so must maintain a balance between homeostasis and inappropriate immune activation and consequent pathology. Epithelial cells have a vital role orchestrating pulmonary homeostasis and defense against pathogens. TGF-β regulates an array of immune responses—both inflammatory and regulatory—however, its function is highly location- and context-dependent. We demonstrate that epithelial-derived TGF-β acts as a pro-viral factor suppressing early immune responses during influenza A infection. Mice specifically lacking bronchial epithelial TGF-β1 (epTGFβKO) displayed marked protection from influenza-induced weight loss, airway inflammation, and pathology. However, protection from influenza-induced pathology was not associated with a heightened lymphocytic immune response. In contrast, the kinetics of interferon beta (IFNβ) release into the airways was significantly enhanced in epTGFβKO mice compared with control mice, with elevated IFNβ on day 1 in epTGFβKO compared with control mice. This induced a heighted antiviral state resulting in impaired viral replication in epTGFβKO mice. Thus, epithelial-derived TGF-β acts to suppress early IFNβ responses leading to increased viral burden and pathology. This study demonstrates the importance of the local epithelial microenvironmental niche in shaping initial immune responses to viral infection and controlling host disease.