Type-III interferons (IFNs) are important mediators of antiviral immunity. IFN-λ4 is unique among type-III IFNs because it can be produced only in those individuals who carry a dG allele of a genetic variant rs368234815-TT/dG. Surprisingly, the individuals who can produce IFN-λ4, an antiviral cytokine, are also less likely to clear HCV infection. We aimed to explore unique functional properties of IFN-λ4 that might explain its negative effect on HCV clearance. We used fresh primary human hepatocytes (PHH) treated with recombinant type-III IFNs or infected with Sendai virus (SeV) to model acute viral infection, and subsequently validated our findings in HepG2 cell line models. Endogenous IFN-λ4 protein was detectable only in SeV-infected PHH from individuals with the dG allele; being poorly secreted, IFN-λ4 was highly functional even at concentrations below 50 pg/ml. IFN-λ4 acted faster than other type-III IFNs in inducing antiviral genes as well as negative regulators of IFN response. Transient exposure of PHH to IFN-λ4 but not IFN-λ3 caused a strong and prolonged induction of SOCS1, and IFN-λ4 treated PHH became refractory to further type-III IFN stimulation. Our results suggest unique functional properties of IFN-λ4 that can be important both in viral clearance and other clinical conditions.