Interferon lambda 4 gene (IFNL4) encodes IFN-λ4, a new member of the IFN-λ family with antiviral activity. In humans IFNL4 open reading frame is truncated by a polymorphic frame-shift insertion that eliminates IFN-λ4 and turns IFNL4 into a polymorphic pseudogene. Functional IFN-λ4 has antiviral activity but the elimination of IFN-λ4 through pseudogenization is strongly associated with improved clearance of hepatitis C virus (HCV) infection. We show that functional IFN-λ4 is conserved and evolutionarily constrained in mammals and thus functionally relevant. However, the pseudogene has reached moderately high frequency in Africa, America, and Europe, and near fixation in East Asia. In fact, the pseudogenizing variant is among the 0.8% most differentiated SNPs between Africa and East Asia genome-wide. Its raise in frequency is associated with additional evidence of positive selection, which is strongest in East Asia, where this variant falls in the 0.5% tail of SNPs with strongest signatures of recent positive selection genome-wide. Using a new Approximate Bayesian Computation (ABC) approach we infer that the pseudogenizing allele appeared just before the out-of-Africa migration and was immediately targeted by moderate positive selection; selection subsequently strengthened in European and Asian populations resulting in the high frequency observed today. This provides evidence for a changing adaptive process that, by favoring IFN-λ4 inactivation, has shaped present-day phenotypic diversity and susceptibility to disease.