Background: To gain insight into host-microbe interactions in a piglet model, a functional genomics approach was used to address the working hypothesis that transcriptionally regulated genes associated with promoting epithelial barrier function are activated as a defensive response to the intestinal microbiota. Cesarean-derived germfree (GF) newborn piglets were colonized with adult swine feces, and villus and crypt epithelial cell transcriptomes from colonized and GF neonatal piglets were compared using laser-capture microdissection and high-density porcine oligonucleotide microarray technology. Results: Consistent with our hypothesis, resident microbiota induced the expression of genes contributing to intestinal epithelial cell turnover, mucus biosynthesis, and priming of the immune system. Furthermore, differential expression of genes associated with antigen presentation (pan SLA class I, B2M, TAP1 and TAPBP) demonstrated that microbiota induced immune responses using a distinct regulatory mechanism common for these genes. Specifically, gene network analysis revealed that microbial colonization activated both type I (IFNAR) and type II (IFNGR) interferon receptor mediated signaling cascades leading to enhanced expression of signal transducer and activator of transcription 1 (STAT1), STAT2 and IFN regulatory factor 7 (IRF7) transcription factors and the induction of IFN-inducible genes as a reflection of intestinal epithelial inflammation. In addition, activated RNA expression of NF-kappa-B inhibitor alpha (NFκBIA; a.k.a I-kappa-B-alpha, IKBα) and toll interacting protein (TOLLIP), both inhibitors of inflammation, along with downregulated expression of the immunoregulatory transcription factor GATA binding protein-1 (GATA1) is consistent with the maintenance of intestinal homeostasis. Conclusion: This study supports the concept that the intestinal epithelium has evolved to maintain a physiological state of inflammation with respect to continuous microbial exposure, which serves to sustain a tight intestinal barrier while preventing overt inflammatory responses that would compromise barrier function.