The human gut is in constant complex interaction with the external environment. Although much is understood about the composition and function of the microbiota, much remains to be learnt about the mechanisms by which these organisms interact with the immune system in health and disease. Type 1 interferon (T1IFN), a ubiquitous and pleiotropic family of cytokines, is a critical mediator of the response to viral, bacterial, and other antigens sampled in the intestine. Although inflammation is enhanced in mouse model of colitis when T1IFN signaling is lost, the action of T1IFN is context specific and can be pro- or anti-inflammatory. In humans, T1IFN has been used to treat inflammatory diseases, including multiple sclerosis and inflammatory bowel disease but intestinal inflammation can also develop after the administration of T1IFN. Recent findings indicate that “tonic” or “endogenous” T1IFN, induced by signals from the commensal microbiota, modulates the local signaling environment to prime the intestinal mucosal immune system to determine later responses to pathogens and commensal organisms. This review will summarize the complex immunological effects of T1IFN and recent the role of T1IFN as a mediator between the microbiota and the mucosal immune system, highlighting human data wherever possible. It will discuss what we can learn from clinical experiences with T1IFN and how the T1IFN pathway may be manipulated in the future to maintain mucosal homeostasis.