Herpes simplex virus Type I (HSV‐1) is a neurotropic virus that is capable of infecting not only neurons, but also microglia and astrocytes and can establish latent infection in the central nervous system (CNS). We investigated whether IFN lambda (IFN‐λ), a newly identified member of IFN family, has the ability to inhibit HSV‐1 infection of primary human astrocytes and neurons. Both astrocytes and neurons were found to be highly susceptible to HSV‐1 infection. However, upon IFN‐λ treatment, HSV‐1 replication in both astrocytes and neurons was significantly suppressed, which was evidenced by the reduced expression of HSV‐1 DNA and proteins. This IFN‐λ‐mediated action on HSV‐1 could be partially neutralized by antibody to IFN‐λ receptor. Investigation of the mechanisms showed that IFN‐λ treatment of astrocytes and neurons resulted in the upregulation of endogenous IFN‐α/β and several IFN‐stimulated genes (ISGs). To block IFN‐α/β receptor by a specific antibody could compromise the IFN‐λ actions on HSV‐1 inhibition and ISG induction. In addition, IFN‐λ treatment induced the expression of IFN regulatory factors (IRFs) in astrocytes and neurons. Furthermore, IFN‐λ treatment of astrocytes and neurons resulted in the suppression of suppressor of cytokine signaling 1 (SOCS‐1), a key negative regulator of IFN pathway. These data suggest that IFN‐λ possesses the anti‐HSV‐1 function by promoting Type I IFN‐mediated innate antiviral immune response in the CNS cells. © 2010 Wiley‐Liss, Inc.