The facility houses 3.8 million hens, according to the company, which sells eggs to food manufacturers, government agencies and retailers.
"We went to great lengths to prevent our birds from contracting AI (avian influenza), but despite best efforts we now confirm many of our birds are testing positive," Sonstegard said in a statement.
The flock has been quarantined, and birds on the property will be culled to prevent the spread of the disease, the U.S. Department of Agriculture said. The virus can kill nearly an entire infected flock within 48 hours.
The Agriculture Department said the Iowa flock numbered 5.3 million birds. The larger figure likely represents the capacity of the farm, while the company number was the actual number of birds on site, said Bill Northey, Iowa's secretary of agriculture.
A loss of 3.8 million birds represents more than 6 percent of the egg-laying hens in Iowa and more than 1 percent of the U.S. flock, meaning "there definitely will be some customers that will be impacted by this," Northey said.
Iowa was already among 12 states that have detected bird flu in poultry since the beginning of the year. The other states are Arkansas, Idaho, Kansas, Minnesota, Missouri, Montana, North Dakota, Oregon, South Dakota, Washington and Wisconsin.