IL-7 plays a crucial role in controlling T-cell development and homeostasis. As IL-7 may be derived from extra-intestinal sources, and exogenous IL-7 broadly affects lymphoid populations, the actions of epithelial cell (EC)-derived IL-7 is not fully understood. The effect of intestinal specific expression of IL-7 on intestinal mucosal lymphocytes was investigated using an IL-7 transgenic mouse model. We generated an intestinal epithelial cell specific over-expressing IL-7 transgenic mouse model (IL-7^vill) and compared their phenotype and function to wild-type C57BL/6J mice. EC-derived IL-7 over-expression was found to be exclusively in the small and large intestine. Numbers and subtypes of mucosal lymphocytes, including intraepithelial lymphocytes (IEL) and lamina propria lymphocytes (LPL) significantly changed in IL-7^vill mice. From a functional standpoint, IEL proliferation also significantly increased in IL-7^vill mice. IEL cytokine expression significantly changed in both TCR-⁺ and TCR-⁺ IEL sub-populations; including a significant increase in IFN-, TNF- as well as an increase in keratinocyte growth factor expression. EC expression of CD103 (integrin _E7), the ligand of E-cadherin, markedly up-regulated and may account for a mechanism of the massive expansion of IEL in transgenic mice. Systemic lymphoid populations did not change in transgenic mice. IL-7 over-expression by intestinal EC significantly affected IEL phenotype and function. These results offer insight into the role of IL-7 in IEL development, and suggest a critical role of EC-derived expression of IL-7 in the phenotype and function of IEL.