Type III interferons (IFNs), also called lambda interferons (IFN-λ), comprise three isoforms, IFN-λ1 (interleukin-29 [IL-29]), IFN-λ2 (IL-28A), and IFN-λ3 (IL-28B). Only limited information is available on their expression and biological functions in humans. Type I and type II IFNs protect human pancreatic islets against coxsackievirus infection, and this is important since such viruses have been proposed to play a role in the development of human type 1 diabetes. Here we investigated whether type III IFN is expressed during infection of human islet cells with coxsackievirus and if type III IFN regulates permissiveness to such infections. We show that human islets respond to a coxsackievirus serotype B3 (CVB3) infection by inducing the expression of type III IFNs. We also demonstrate that islet endocrine cells from nondiabetic individuals express the type III IFN receptor subunits IFN-λR1 and IL-10R2. Pancreatic alpha cells express both receptor subunits, while pancreatic beta cells express only IL-10R2. Type III IFN stimulation elicited a biological response in human islets as indicated by the upregulated expression of antiviral genes as well as pattern recognition receptors. We also show that type III IFN significantly reduces CVB3 replication. Our studies reveal that type III IFNs are expressed during CVB3 infection and that the expression of the type III IFN receptor by the human pancreatic islet allows this group of IFNs to regulate the islets' permissiveness to infection. Our novel observations suggest that type III IFNs may regulate viral replication and thereby contribute to reduced tissue damage and promote islet cell survival during coxsackievirus infection.