Influenza B virus (IBV) is an acute, respiratory RNA virus that has been assumed to induce the eventual death of all infected cells. We and others have shown however, that infection with apparently cytopathic viruses does not necessarily lead to cell death; some cells can intrinsically clear the virus and persist in the host long-term. To determine if any cells can survive direct IBV infection, we here generate a recombinant IBV capable of activating a host-cell reporter to permanently label all infected cells. Using this system, we demonstrate that IBV infection leads to the formation of a survivor cell population in the proximal airways that are ciliated-like, but transcriptionally and phenotypically distinct from both actively infected and bystander ciliated cells. We also show that survivor cells are critical to maintain respiratory barrier function. These results highlight a host response pathway that preserves the epithelium to limit the severity of IBV disease.