The mechanisms by which mucosal homeostasis is maintained are of central importance to inflammatory bowel disease. Critical to these processes is the intestinal epithelial cell (IEC), which regulates immune responses at the interface between the commensal microbiota and the host. CD1d presents self and microbial lipid antigens to natural killer T (NKT) cells, which are involved in the pathogenesis of colitis in animal models and human inflammatory bowel disease. As CD1d crosslinking on model IECs results in the production of the important regulatory cytokine interleukin (IL)-10 (ref. 9), decreased epithelial CD1d expression--as observed in inflammatory bowel disease--may contribute substantially to intestinal inflammation. Here we show in mice that whereas bone-marrow-derived CD1d signals contribute to NKT-cell-mediated intestinal inflammation, engagement of epithelial CD1d elicits protective effects through the activation of STAT3 and STAT3-dependent transcription of IL-10, heat shock protein 110 (HSP110; also known as HSP105), and CD1d itself. All of these epithelial elements are critically involved in controlling CD1d-mediated intestinal inflammation. This is demonstrated by severe NKT-cell-mediated colitis upon IEC-specific deletion of IL-10, CD1d, and its critical regulator microsomal triglyceride transfer protein (MTP), as well as deletion of HSP110 in the radioresistant compartment. Our studies thus uncover a novel pathway of IEC-dependent regulation of mucosal homeostasis and highlight a critical role of IL-10 in the intestinal epithelium, with broad implications for diseases such as inflammatory bowel disease.