The airway epithelium, which lines the conducting airways, is central to the defense of the lungs against inhaled particulate matter and pathogens such as SARS-CoV-2, the virus that causes COVID-19. Recognition of pathogens results in the activation of an innate and intermediate immune response which involves the release of cytokines and chemokines by the airway epithelium. This response can inhibit further viral invasion and influence adaptive immunity. However, severe COVID-19 is characterized by a hyper-inflammatory response which can give rise to clinical presentations including lung injury and lead to acute respiratory distress syndrome, viral pneumonia, coagulopathy, and multi-system organ failure. In response to SARS-CoV-2 infection, the airway epithelium can mount a maladaptive immune response which can delay viral clearance, perpetuate excessive inflammation, and contribute to the pathogenesis of severe COVID-19. In this article, we will review the barrier and immune functions of the airway epithelium, how SARS-CoV-2 can interact with the epithelium, and epithelial-derived cytokines and chemokines and their roles in COVID-19 and as biomarkers. Finally, we will discuss these immune mediators and their potential as therapeutic targets in COVID-19.