Since its discovery in 2003, the type III interferon-λ (IFN-λ) family has been found to contribute significantly to the host response to infection. Whilst IFN-λ shares many features with type I IFN induction and signalling pathways, the tissue-specific restricted expression of its receptor, IL28RA, makes IFN-λ a major mediator of host innate immunity in tissues and organs with a high epithelial cell content. Host susceptibility and responses to infection are known to be heterogeneous, and the identification of common genetic variants linked to disease outcome by genome-wide association studies (GWAS) has underscored the significance of host polymorphisms in responses to infection. Several such GWAS have highlighted the IFN-λ locus on chromosome 19q13 as an area of genetic variation significantly associated with hepatitis C virus (HCV) infection, and the rs12979860 genotype can be used in clinical practice as a biomarker for predicting a successful response to treatment with pegylated IFN and ribavarin. Here, we discuss IFN-λ genetic polymorphisms and their role in HCV and other infectious diseases as well as their potential impact on clinical diagnostics, patient stratification and therapy. Finally, the broader role of IFN-λ in the immunopathogenesis of non-infectious inflammatory diseases is considered.