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Hepatitis C virus (HCV) is a major cause of chronic liver disease, cirrhosis, and hepatocellular carcinoma. Current therapy with pegylated interferon alpha (IFN-alpha) in combination with ribavirin is associated with adverse effects and often fails to induce a sustained response. IFN-lambdas, recently discovered IFN gene family members, exhibit antiviral and cell stimulatory activities similar to IFN-alpha. We aimed to determine whether IFN-lambda exhibits antiviral activity toward HCV and to compare the signal transduction and effector gene pathways with those of IFN-alpha.Using the HCV replicon system and cell culture infectious reporter virus, we compared IFN-alpha and IFN-lambda effects on HCV RNA replication and protein expression, as measured by quantitative reverse-transcriptase polymerase chain reaction, luciferase expression, and Western blot. Receptor expression and signaling pathways were explored using flow cytometry and Western blot. IFN-alpha- and IFN-lambda-mediated gene expression changes were compared using microarray analyses.IFN-lambda exhibited dose- and time-dependent HCV inhibition, independent of types I and II IFN receptors. The kinetics of IFN-lambda-mediated signal transducers and activators of transcription (STAT) activation and induction of potential effector genes were distinct from those of IFN-alpha. IFN-lambda induced steady increases in levels of known interferon stimulated genes (ISGs), whereas IFN-alpha ISGs peaked early and declined rapidly. IFN-lambda inhibited replication of HCV genotypes 1 and 2 and enhanced the antiviral efficacy of subsaturating levels of IFN-alpha.These results demonstrate distinct differences in IFN-lambda- and IFN-alpha-induced antiviral states. Understanding these differences may prove useful for developing new HCV treatment strategies.