The interferon (IFN)-λ family of type III cytokines includes the closely related interleukin (IL)-28A (IFN-λ2), IL-28B (IFN-λ3), and IL-29 (IFN-λ1). They signal through the Janus kinases (JAK)-signal transducers and activators of transcription pathway and promote an antiviral state by the induction of expression of several interferon-stimulated genes (ISGs). Contrary to type I IFNs, the effect of IFN-λ cytokines is largely limited to epithelial cells due to the restricted pattern of expression of their specific receptor. Several genome-wide association studies have established a strong correlation between polymorphism in the region of IL-28B gene (encoding for IFN-λ3) and both spontaneous and therapeutic IFN-mediated clearance of hepatitis C virus (HCV) infection, but the mechanism(s) underlying this enhanced viral clearance are not fully understood. IFN-λ3 directly inhibits HCV replication, and in vitro studies suggest that polymorphism in the IFN-λ3 and its recently identified overlapping IFN-λ4 govern the pattern of ISGs induced upon HCV infection of hepatocytes. IFN-λ can also be produced by dendritic cells, and apart from its antiviral action on hepatocytes, it can regulate the inflammatory response of monocytes/macrophages, thus acting at the interface between innate and adaptive immunity. Here, we review the current state of knowledge about the role of IFN-λ cytokines in mediating and regulating the immune response during acute and chronic HCV infections.