Influenza viruses (IV) cause pneumonia in humans with progression to lung failure and fatal outcome. Dysregulated release of cytokines including type I interferons (IFNs) has been attributed a crucial role in immune-mediated pulmonary injury during severe IV infection. Using ex vivo and in vivo IV infection models, we demonstrate that alveolar macrophage (AM)-expressed IFN-β significantly contributes to IV-induced alveolar epithelial cell (AEC) injury by autocrine induction of the pro-apoptotic factor TNF-related apoptosis- inducing ligand (TRAIL). Of note, TRAIL was highly upregulated in and released from AM of patients with pandemic H1N1 IV-induced acute lung injury. Elucidating the cell-specific underlying signalling pathways revealed that IV infection induced IFN-β release in AM in a protein kinase R- (PKR-) and NF-κB- dependent way. Bone marrow chimeric mice lacking these signalling mediators in resident and lung-recruited AM and mice subjected to alveolar neutralization of IFN-β and TRAIL displayed reduced alveolar epithelial cell apoptosis and attenuated lung injury during severe IV pneumonia. Together, we demonstrate that macrophage-released type I IFNs, apart from their well-known anti-viral properties, contribute to IV-induced AEC damage and lung injury by autocrine induction of the pro-apoptotic factor TRAIL. Our data suggest that therapeutic targeting of the macrophage IFN-β-TRAIL axis might represent a promising strategy to attenuate IV-induced acute lung injury.