The human interferon (IFN) response is a key innate immune mechanism to fight virus infection. IFNs are host-encoded secreted proteins, which induce IFN-stimulated genes (ISGs) with antiviral properties. Among the three classes of IFNs, type III IFNs, also called IFN lambdas (IFNLs), are an essential component of the innate immune response to hepatitis C virus (HCV). In particular, human polymorphisms in IFNL gene loci correlate with hepatitis C disease progression and with treatment response. To date, the underlying mechanisms remain mostly elusive; however it seems clear that viral infection of the liver induces IFNL responses. As IFNL receptors show a more restricted tissue expression than receptors for other classes of IFNs, IFNL treatment has reduced side effects compared to the classical type I IFN treatment. In HCV therapy, however, IFNL will likely not play an important role as highly effective direct acting antivirals (DAA) exist. Here, we will review our current knowledge on IFNL gene expression, protein properties, signaling, ISG induction, and its implications on HCV infection and treatment. Finally, we will discuss the lessons learnt from the HCV and IFNL field for virus infections beyond hepatitis C.