Type I IFNs (IFNα/β) have been shown to have a central role in the pathophysiology of lupus erythematosus (LE). The recently discovered type III IFNs (IFNλ1/IL29, IFNλ2/IL28a, IFNλ3/IL28b) share several functional similarities with type I IFNs, particularly in antiviral immunity. As IFNλs act primarily on epithelial cells, we investigated whether type III IFNs might also have a role in the pathogenesis of cutaneous LE (CLE). Our investigations demonstrate that IFNλ and the IFNλ receptor were strongly expressed in the epidermis of CLE skin lesions and related autoimmune diseases (lichen planus and dermatomyositis). Significantly enhanced IFNλ1 could be measured in the serum of CLE patients with active skin lesions. Functional analyses revealed that human keratinocytes are able to produce high levels of IFNλ1 but only low amounts of IFNα/β/γ in response to immunostimulatory nuclear acids, suggesting that IFNλ is a major IFN produced by these cells. Exposure of human keratinocytes to IFNλ1 induced the expression of several proinflammatory cytokines, including CXCL9 (CXC-motiv ligand 9), which drive the recruitment of immune cells and are associated with the formation of CLE skin lesions. Our results provide evidence for a role of type III IFNs in not only antiviral immunity but also autoimmune diseases of the skin.