Type III IFN lambdas (IFN-λ) have recently been described as important mediators of immune responses at barrier surfaces. However, their role in autoimmune diseases such as systemic lupus erythematosus (SLE), a condition characterized by aberrant type I IFN signaling, has not been determined. Here, we identify a nonredundant role for IFN-λ in immune dysregulation and tissue inflammation in a model of TLR7-induced lupus. IFN-λ protein is increased in murine lupus and IFN-λ receptor (Ifnlr1) deficiency significantly reduces immune cell activation and associated organ damage in the skin and kidneys without effects on autoantibody production. Single-cell RNA sequencing in mouse spleen and human peripheral blood revealed that only mouse neutrophils and human B cells are directly responsive to this cytokine. Rather, IFN-λ activates keratinocytes and mesangial cells to produce chemokines that induce immune cell recruitment and promote tissue inflammation. These data provide insights into the immunobiology of SLE and identify type III IFNs as important factors for tissue-specific pathology in this disease.