Type III interferon (IFN-λ) was initially thought to have functions similar to those of the type I interferons (IFN-α and IFN-β). New findings have indicated, however, that IFN-λ has a non-redundant role in the innate antiviral, antifungal and antiprotozoal defences of mucosal barriers. In this Review, we highlight recent work showing that IFN-λ inhibits virus dissemination within the body and limits the transmission of respiratory and gastrointestinal viruses to naive hosts. We also discuss findings indicating that IFN-λ can act on neutrophils to prevent invasive pulmonary aspergillosis. We summarize results showing that IFN-λ signalling differs in several respects from IFN-α and IFN-β signalling, particularly in neutrophils. Finally, we discuss new findings indicating that IFN-λ is a potent enhancer of adaptive immune responses in the respiratory mucosa.