Interferon-lambda (IFN-λ) is a new IFN type, related to IFN-α, that is commonly used in the clinic. However, significant side effects accompanying IFN-α treatment limit enthusiasm for IFN-α. In this review, we discuss the current landscape of IFN-α use in oncology and describe the biologic characteristics of IFN-λ. IFN-λ offers unique advantages, including a more tumor cell selective targeting, lower off-target binding and an ability to generate both innate and adaptive immune responses. IFN-λ has also demonstrated therapeutic benefit in murine cancer models. IFN-λ may be used in clinic as a single agent or in combination with other immunotherapy agents, such as immune checkpoint inhibitors. Further clinical trials will be needed to fully elucidate the potential of this novel agent in oncology.