Interferon (IFN)-λ forms the type III IFN family. Although they signal through distinct receptors, type I (IFN-α/β) and type III IFNs elicit remarkably similar responses in cells. However, in vivo, type III and type I IFN responses are not fully redundant as their respective contribution to the antiviral defense highly depends on virus species. IFN-λ is much more potent than IFN-α/β at controlling rotavirus infection. In contrast, clearance of several other viruses, such as influenza virus, mostly depends on IFN-α/β. The IFN-λ receptor was reported to be preferentially expressed on epithelial cells. Cells responsible for IFN-λ production are still poorly characterized but seem to overlap only partly IFN-α/β-producing cells. Accumulating data suggest that epithelial cells are also important IFN-λ producers. Thus, IFN-λ may primarily act as a protection of mucosal entities, such as the lung, skin or digestive tract. Type I and type III IFN signal transduction pathways largely overlap, and cross talk between these IFN systems occurs. Finally, this review addresses the potential benefit of IFN-λ use for therapeutic purposes and summarizes recent results of genome-wide association studies that identified polymorphisms in the region of the IFN-λ3 gene impacting on the outcome of treatments against hepatitis C virus infection.