Crohn's disease (CD) is a complex chronic inflammatory disorder that may affect any part of gastrointestinal tract with extra-intestinal manifestations and associated immune dysregulation. To characterize heterogeneity in CD, we profiled single-cell transcriptomics of 170 samples from 65 CD patients and 18 non-inflammatory bowel disease (IBD) controls in both the terminal ileum (TI) and ascending colon (AC). Analysis of 202,359 cells identified a novel epithelial cell type in both TI and AC, featuring high expression of LCN2, NOS2, and DUOX2, and thus is named LND. LND cells, confirmed by high-resolution in-situ RNA imaging, were rarely found in non-IBD controls, but expanded significantly in active CD. Compared to other epithelial cells, genes defining LND cells were enriched in antimicrobial response and immunoregulation. Moreover, multiplexed protein imaging demonstrated that LND cell abundance was associated with immune infiltration. Cross-talk between LND and immune cells was explored by ligand-receptor interactions and further evidenced by their spatial colocalization. LND cells showed significant enrichment of expression specificity of IBD/CD susceptibility genes, revealing its role in immunopathogenesis of CD. Investigating lineage relationships of epithelial cells detected two LND cell subpopulations with different origins and developmental potential, early and late LND. The ratio of the late to early LND cells was related to anti-TNF response. These findings emphasize the pathogenic role of the specialized LND cell type in both Crohn's ileitis and Crohn's colitis and identify novel biomarkers associated with disease activity and treatment response.