A large portion of the heterogeneity in coronavirus disease 2019 (COVID-19) susceptibility and severity of illness (SOI) remains poorly understood. Recent evidence suggests that SARS-CoV-2 infection-associated damage to alveolar epithelial type 2 cells (AT2s) in the distal lung may directly contribute to disease severity and poor prognosis in COVID-19 patients. Our in vitro modeling of SARS-CoV-2 infection in induced pluripotent stem cell (iPSC)-derived AT2s from 10 different individuals showed interindividual variability in infection susceptibility and the postinfection cellular viral load. To understand the underlying mechanism of the AT2′s capacity to regulate SARS-CoV-2 infection and cellular viral load, a genome-wide differential gene expression analysis between the mock and SARS-CoV-2 infection-challenged AT2s was performed. The 1393 genes, which were significantly (one-way ANOVA FDR-corrected p ≤ 0.05; FC abs ≥ 2.0) differentially expressed (DE), suggest significant upregulation of viral infection-related cellular innate immune response pathways (p-value ≤ 0.05; activation z-score ≥ 3.5), and significant downregulation of the cholesterol- and xenobiotic-related metabolic pathways (p-value ≤ 0.05; activation z-score ≤ −3.5). Whilst the effect of post-SARS-CoV-2 infection response on the infection susceptibility and postinfection viral load in AT2s is not clear, interestingly, pre-infection (mock-challenged) expression of 238 DE genes showed a high correlation with the postinfection SARS-CoV-2 viral load (FDR-corrected p-value ≤ 0.05 and r2-absolute ≥ 0.57). The 85 genes whose expression was negatively correlated with the viral load showed significant enrichment in viral recognition and cytokine-mediated innate immune GO biological processes (p-value range: 4.65 × 10−10 to 2.24 × 10−6). The 153 genes whose expression was positively correlated with the viral load showed significant enrichment in cholesterol homeostasis, extracellular matrix, and MAPK/ERK pathway-related GO biological processes (p-value range: 5.06 × 10−5 to 6.53 × 10−4). Overall, our results strongly suggest that AT2s’ pre-infection innate immunity and metabolic state affect their susceptibility to SARS-CoV-2 infection and viral load.