We study the Collins function H ⊥ 1 of the Λ hyperon, which describes the fragmentation of a transversely polarized quark into an unpolarized Λ hyperon. We calculate H ⊥ 1 for light quarks of the Λ hyperon, in the diquark spectator model with a Gaussian form factor for the hyperon-quarkdiquark vertex. The model calculation includes contributions from both the scalar diquark and vector diquark spectators. Using the model result, we estimate the azimuthal asymmetry A 12 , which appears in the ratio of unlike-sign events to like-sign events contributed by double Collins effects, in the processes e þ e − → ΛΛX and e þ e − → ΛπX. The QCD evolution effects for the half k T moment of the Collins function and the unpolarized fragmentation function D 1 ðzÞ are also included. The results show that the asymmetries are sizable and measurable at the kinematical configurations of Belle and BABAR experiments. We also find that the evolution effects play an important role in the phenomenological analysis.