The type III interferon (IFN) family elicits an antiviral response that is nearly identical to that evoked by IFN-alpha/beta. However, these cytokines (known as IFN-lambda1, 2, and 3) signal through a distinct receptor, and thus may be resistant to the evasion strategies used by some viruses to avoid the IFN-alpha/beta response. Orthopoxviruses are highly resistant to IFN-alpha/beta because they encode well-characterized immunomodulatory proteins that inhibit IFN activity. These include a secreted receptor (B18R) that neutralizes IFN-alpha/beta, and a cytoplasmic protein (E3L) that blocks IFN-alpha/beta effector functions in infected cells. We therefore determined the ability of these immunomodulators to abrogate the IFN-lambda-induced antiviral response. We found that (i) vaccinia virus (VACV) replication is resistant to IFN-lambda antiviral activity; (ii) neither VACV B18R nor the variola virus homolog B20R neutralizes IFN-lambda; (iii) VACV E3L inhibits the IFN-lambda-mediated antiviral response through a PKR-dependent pathway; (iv) VACV infection inhibits IFN-lambdaR-mediated signal transduction and gene expression. These results demonstrate differential sensitivity of IFN-lambda to multiple distinct evasion mechanisms employed by a single virus.