IL-25 (IL-17E) is a member of the IL-17 cytokine family. IL-25-deficient mice exhibit impaired Th2 immunity against nematode infection, implicating IL-25 as a key component in mucosal immunity. The sources of IL-25 and mechanisms responsible for the induction of Th2 immunity by IL-25 in the gastrointestinal tract remain poorly understood. There is also little information on the regulation of IL-25 during inflammation or its role in gut function. In the current study, we investigated the regulation of IL-25 during Nippostrongylus brasiliensis infection and the contribution of IL-25 to the infection-induced alterations in intestinal function. We found that epithelial cells, but not immune cells, are the major source of IL-25 in the small intestine. N. brasiliensis infection-induced upregulation of IL-25 depends upon IL-13 activation of STAT6. IL-25(-/-) mice had diminished intestinal smooth muscle and epithelial responses to N. brasiliensis infection that were associated with an impaired Th2 protective immunity. Exogenous IL-25 induced characteristic changes similar to those after nematode infection but was unable to restore the impaired host immunity against N. brasiliensis infection in IL-13(-/-) mice. These data show that IL-25 plays a critical role in nematode infection-induced alterations in intestinal function that are important for host protective immunity, and IL-13 is the major downstream Th2 cytokine responsible for the IL-25 effects.