Type-III interferons (IFNs) are important mediators of antiviral immunity. IFN-λ4 is a unique type-III IFN because it is produced only in individuals who carry a dG allele of a genetic variant rs368234815-dG/TT. Counterintuitively, those individuals who can produce IFN-λ4, an antiviral cytokine, are also less likely to clear HCV infection. Here, we searched for unique functional properties of IFN-λ4 that might explain its negative effect on HCV clearance. We used fresh primary human hepatocytes (PHH) treated with recombinant type-III IFNs or infected with Sendai virus (SeV) to model acute viral infection, and subsequently validated our findings in HepG2 cell line models. Endogenous IFN-λ4 protein was detectable only in SeV-infected PHH from individuals with the dG allele, where it was poorly secreted but highly functional even at concentrations below 50 pg/ml. IFN-λ4 acted faster than other type-III IFNs in inducing antiviral genes as well as negative regulators of IFN response, such as USP18 and SOCS1. Transient treatment of PHH with IFN-λ4 but not IFN-λ3 caused a strong and sustained induction of SOCS1, and refractoriness to further stimulation with IFN-λ3. Our results suggest unique functional properties of IFN-λ4 that can be important in viral clearance and other clinical conditions.