This study compared the ability of IFN-α and IFN-λ to induce signal transduction and gene expression in primary human hepatocytes, PBLs, and monocytes. IFN-α drug products are widely used to treat chronic HCV infection; however, IFN-α therapy often induces hematologic toxicities as a result of the broad expression of IFNARs on many cell types, including most leukocytes. rIFN-λ1 is currently being tested as a potential alternative to IFN-α for treating chronic HCV. Although IFN-λ has been shown to be active on hepatoma cell lines, such as HepG2 and Huh-7, its ability to induce responses in primary human hepatocytes or leukocytes has not been examined. We found that IFN-λ induces activation of Jak/STAT signaling in mouse and human hepatocytes, and the ability of IFN-λ to induce STAT activation correlates with induction of numerous ISGs. Although the magnitude of ISG expression induced by IFN-λ in hepatocytes was generally lower than that induced by IFN-α, the repertoire of regulated genes was quite similar. Our findings demonstrate that although IFN-α and IFN-λ signal through distinct receptors, they induce expression of a common set of ISGs in hepatocytes. However, unlike IFN-α, IFN-λ did not induce STAT activation or ISG expression by purified lymphocytes or monocytes. This important functional difference may provide a clinical advantage for IFN-λ as a treatment for chronic HCV infection, as it is less likely to induce the leukopenias that are often associated with IFN-α therapy.