Similar to Type I IFNs (IFN-α/β), Type III IFNs (IFN-λ1,2,3,4) exert antiviral and antiproliferative effects through the same JAK-STAT mediated pathway that results in the expression of interferon-stimulated genes (ISGs). Most viral infections induce the expression of both type I and type III IFNs, but it is unclear whether the same cell types are responsible for IFN-λ and IFN-α/β production in vivo, and whether IFN-λ production is induced by the same mechanisms which trigger type I IFN synthesis. In order to identify the source(s) of type III IFNs in the course of a virus infection, we have generated an IFN-λ reporter mouse in which the IFN-λ2 coding sequence was replaced with eGFP by homologous recombination. Using the IFN-λ reporter mouse we have now been able to identify IFN-λ-producing cell populations following RNA virus infection in vivo. Lung epithelial cells are the predominant IFN-λ-producing cell population following intranasal (i.n.) infection with Newcastle Disease Virus (NDV), a paramyxovirus virus previously shown to induce high levels of IFN-α synthesis by alveolar macrophages. Despite robust IFN-α induction in response to i.n. NDV instillation, alveolar macrophages are not a source of IFN-λ in this infection. This observation supports a model of differential regulatory mechanisms governing Type I and Type III IFN expression wherein the same viral pathogen may predominantly trigger one IFN type depending on the cell type infected. Mitochondrial anti-viral signaling protein (MAVS) is required for production of both Type I and Type III IFN expression, as MAVS-deficient mice fail to upregulate either IFN type during NDV infection. MAVS-dependent IFN production strongly suggests that induction of both IFNs relies on RIG-I/MDA5 recognition of NDV. The results shown here indicate that epithelial cells represent an important source of IFN-λ during infection and support a primary role for IFN-λ in conferring antiviral protection at the mucosal surface.