For two decades the scientific community has sought to understand why some people clear hepatitis C virus (HCV) and others do not. Recently, several large genome-wide association studies have identified single nucleotide polymorphisms (SNPs) linked to interferon lambda 3 (IFNλ3) that are associated with the spontaneous resolution and successful treatment of HCV infection. These observations are generating intense research activity; the hope is that IFNλ3 genetic variants may serve as important predictive biomarkers of treatment outcome and offer new insights into the biological pathways involved in viral control. A pharmacogenomic treatment approach for HCV can now be envisaged, with the incorporation of host genetic variants into a predictive treatment algorithm with other factors. The SNPs associated with the clinical outcome of HCV infection are located some distance from the IFNλ3 gene itself, and causal genetic variants have yet to be clearly defined. Locating these causal variants, mapping in detail the IFNλ3 signalling pathways and determining the downstream genetic signature so induced will clarify the role of IFNλ3 in the pathogenesis of HCV. Clinical studies assessing safety and efficacy in the treatment of HCV with exogenous IFNλ3 are currently underway. Early results suggest that IFNλ3 treatment inhibits HCV replication and is associated with a limited side effect profile. However, hepatotoxicity in both healthy volunteers and HCV-infected patients has been described. This review discusses the genetic studies that link IFNλ3 to both the spontaneous resolution and treatment-induced clearance of HCV and the potential impact of this in clinical practice, the biology of IFNλ3 as currently understood and how this may impact on HCV infection, and describes the early studies that assess the role of this cytokine in the treatment of patients with HCV.