Alpha-1 Antitrypsin Deficiency (AATD) is a genetic disorder caused by mutations in the SERPINA1 gene, leading to misfolding and endoplasmic reticulum accumulation of the alpha-1 antitrypsin (AAT) protein, particularly in individuals with the PiZZ genotype. Clinically, AATD presents as early-onset chronic obstructive pulmonary disease, marked by progressive lung function decline and frequent exacerbations, often triggered by viral or bacterial respiratory infections. We hypothesised that AATD mutations impair host responses to infection, thereby exacerbating disease severity. To investigate this, we generated alveolar type 2 epithelial cells (iAT2s) and macrophages (iMacs) from induced pluripotent stem cells (iPSCs) derived from PiZZ AATD patients and isogenic PiMM controls. iAT2s were cultured at an air-liquid interface and infected with respiratory syncytial virus (RSV) and influenza A virus (IAV), two common respiratory viruses. In AATD iAT2s, we discovered discordant replication kinetics - RSV replication was diminished while IAV exhibited increased replication, potentially driven by intracellular sites of viral replication and their interactions with accumulated AAT protein. In addition, AATD iAT2s showed delayed induction of antiviral and inflammatory gene expressions in response to IAV—distinct from RSV infection, where antiviral responses were consistently suppressed. Next, we assessed infection responses in iMacs from PiZZ AATD patients and PiMM controls. When infected with Streptococcus pneumoniae, AATD iMacs displayed elevated inflammatory gene expressions, suggesting a heightened inflammatory response. Similarly, RSV infection of AATD iMacs resulted in reduced interferon expression and increased pro-inflammatory cytokine expression, further highlighting dysregulated host defence in AATD. These findings demonstrate that AATD mutations differentially rewire infection responses in alveolar epithelial type 2 cells and macrophages, which could lead to prolonged infections and heightened inflammation. Our human iPSC-derived model offers a powerful platform to dissect AATD-specific immune dysfunction, with future work aimed at mapping the underlying pathways and informing the development of targeted therapeutic strategies.