IFNλ is important for epidermal defense against viruses. It is produced by, and acts on, keratinocytes, whereas fibroblasts were previously considered to be unresponsive to this type III IFN. Herein we report findings revealing cell type-specific differences in IFNλ signaling and function in skin resident cells. In dermal fibroblasts, IFNλ induced the expression of myxovirus protein A (MxA), a potent antiviral factor, but not other IFN signature genes as it does in primary keratinocytes. In contrast to its effect on keratinocytes, IFNλ did not phosphorylate signal transducer and activator of transcription 1 in fibroblasts, but instead activated mitogen activated protein kinases (MAPK). Accordingly, inhibition of MAPK activation (p38 and p42/44) blocked the expression of MxA protein in fibroblasts but not in keratinocytes. Functionally, IFNλ inhibited proliferation in keratinocytes but not in fibroblasts. Moreover, IFNλ upregulated the expression of Tumor growth factor beta 1 (TGFβ1)-induced collagens in fibroblasts. Taken together, our findings identify primary human dermal fibroblasts as responder cells to IFNλ. Our study shows cutaneous cell type-specific IFN signaling and suggests that IFNλ, although important for epidermal antiviral competence, may also have a regulatory role in the dermal compartment balancing type I IFN-induced inhibition of tissue repair processes.