More than 40% of HIV infections occur via female reproductive tract (FRT) through heterosexual transmission. Epithelial cells that line the female genital mucosa are the first line of defense against HIV-1 and other sexually transmitted pathogens. These sentient cells recognize and respond to external stimuli by induction of a range of carefully balanced innate immune responses. Previously, we have shown that in response to HIV-1 gp120, the genital epithelial cells (GECs) from upper reproductive tract induce an inflammatory response that may facilitate HIV-1 translocation and infection. In this study, we report that the endometrial and endocervical GECs simultaneously induce biologically active interferon-β (IFNβ) antiviral responses following exposure to HIV-1 that act to protect the epithelial tight junction barrier. The innate antiviral response was directly induced by HIV-1 envelope glycoprotein gp120 and addition of gp120 neutralizing antibody inhibited IFNβ production. Interferon-β was induced by gp120 in upper GECs through Toll-like receptor 2 signaling and required presence of heparan sulfate on epithelial cell surface. The induction of IFNβ was dependent upon activation of transcription factor IRF3 (interferon regulatory factor 3). The IFNβ was biologically active, had a protective effect on epithelial tight junction barrier and was able to inhibit HIV-1 infection in TZM-bl indicator cells and HIV-1 replication in T cells. This is the first report that recognition of HIV-1 by upper GECs leads to induction of innate antiviral pathways. This could explain the overall low infectivity of HIV-1 in the FRT and could be exploited for HIV-1 prophylaxis.