The most studied biological role of type III interferons (IFNs) has so far been their antiviral activity, but their role in autoimmune and inflammatory diseases remains largely unexplored. Here, we show that treatment with IFN-λ2/IL-28A completely halts and reverses the development of collagen-induced arthritis (CIA) and discover cellular and molecular mechanisms of IL-28A antiinflammatory function. We demonstrate that treatment with IL-28A dramatically reduces numbers of proinflammatory IL-17–producing Th17 and γδ T cells in the joints and inguinal lymph nodes, without affecting T cell proliferative responses or levels of anticollagen antibodies. IL-28A exerts its antiinflammatory effect by restricting recruitment of IL-1b–expressing neutrophils, which are important for amplification of inflammation. We identify neutrophils as cells expressing high levels of IFN-λ receptor 1 (IFNLR1)–IL-28 receptor α (IL28RA) and targeted by IL-28A. Our data highlight neutrophils as contributors to the pathogenesis of autoimmune arthritis and present IFN-λs or agonists of IFNLR1–IL28RA as putative new therapeutics for neutrophil-driven inflammation.