Human interferon lambdas (IFN-lambdas) (type III IFNs) exhibit antiviral activity in vitro by binding to a receptor complex distinct from that used by type I and type II IFNs, and subsequent signalling through the Janus kinase signal transducers and activators of transcription (STAT) pathway. However, evidence for a function of type III IFNs during virus infection in vivo is lacking. Here, the expression of murine IFN-lambdas by recombinant vaccinia virus (VACV) is described and these proteins are shown to have potent antiviral activity in vivo. VACV expressing murine IFN-lambda2 (vIFN-lambda2) and IFN-lambda3 (vIFN-lambda3) showed normal growth in tissue culture and expressed N-glycosylated IFN-lambda in infected cell extracts and culture supernatants. The role that murine IFN-lambdas play during virus infection was assessed in two different mouse models. vIFN-lambda2 and vIFN-lambda3 were avirulent for mice infected intranasally and induced no signs of illness or weight loss, in contrast to control viruses. Attenuation of vIFN-lambda2 was associated with increases in lymphocytes in bronchial alveolar lavages and CD4+ T cells in total-lung lymphocyte preparations. In addition, vIFN-lambda2 was cleared more rapidly from infected lungs and, in contrast to control viruses, did not disseminate to the brain. Expression of IFN-lambda2 also attenuated VACV in an intradermal-infection model, characterized by a delay in lesion onset and reduced lesion size. Thus, by characterizing murine IFN-lambdas within a mouse infection model, the potent antiviral and immunostimulatory activity of IFN-lambdas in response to poxvirus infection has been demonstrated.