Chronic lung allograft dysfunction (CLAD) remains the major complication limiting long-term survival among lung transplant recipients (LTRs). Limited understanding of CLAD immunopathogenesis and a paucity of biomarkers remain substantial barriers for earlier detection and therapeutic interventions for CLAD. We hypothesized the airway transcriptome would reflect key immunologic changes in disease. We compared airway brush-derived transcriptomic signatures in CLAD (n = 24) versus non-CLAD (n = 21) LTRs. A targeted assessment of the proteome using concomitant bronchoalveolar lavage (BAL) fluid for 24 cytokines/chemokines and alloimmune T cell responses was performed to validate the airway transcriptome. We observed an airway transcriptomic signature of differential genes expressed (DGEs) in CLAD marked by Type-1 immunity and striking upregulation of two endogenous immune regulators: indoleamine 2, 3 dioxygenase 1 (IDO-1) and tumor necrosis factor receptor superfamily 6B (TNFRSF6B). Advanced CLAD staging was associated with a more intense airway transcriptome signature. In a validation cohort using the identified signature, we found an area under the curve (AUC) of 0.77 for CLAD LTRs. Targeted proteomic analyses revealed a predominant Type-1 profile with detection of IFN-γ, TNF-α, and IL-1β as dominant CLAD cytokines, correlating with the airway transcriptome. The airway transcriptome provides novel insights into CLAD immunopathogenesis and biomarkers that may impact diagnosis of CLAD.