Influenza infection causes an increase in indoleamine 2, 3-dioxygenase (IDO) activity in the lung parenchyma. IDO catabolizes tryptophan into kynurenine, leading to immune dampening. Multiple cell types express IDO, and while IFN-γ upregulates IDO in dendritic cells and macrophages, it is unclear how IDO is affected in respiratory epithelial cells during influenza infection. In this study, the role of IFN-λ in IDO regulation was investigated after influenza infection of respiratory epithelial cells. IDO1 expression increased concurrently with IFN-λ expression. In differentiated NHBE cells, the IDO metabolite was released basolaterally. Recombinant IFN-λ upregulated IDO1 activity, and silencing of IFN-λ decreased IDO1 expression during influenza infection. During IFN-λ stimulation, most differentiated cell types are able to express IDO but during influenza infection, IDO is primarily expressed in uninfected cells. These studies show a role for IDO in the host response to influenza infection, and they provide insights into novel approaches for enhancing vaccine responses and therapeutic approaches.