Type III interferons (IFN-λ) are antiviral and immunomodulatory cytokines that have been best characterized in respiratory and gastrointestinal infections, but the effects of IFN-λ against skin infections have not been extensively investigated. We sought to define the skin-specific effects of IFN-λ against the highly prevalent human pathogen herpes simplex virus (HSV). We infected mice lacking the IFN-λ receptor (Ifnlr1-/-), both the IFN-λ and the IFN-αβ receptor (Ifnar1-/- Ifnlr1-/-), or IFN-λ cytokines (Ifnl2/3-/-) and found that IFN-λ restricts the severity of HSV-1 and HSV-2 skin lesions, independent of a direct effect on viral load. Using conditional knockout mice, we found that IFN-λ signaling in both keratinocytes and neutrophils was necessary to control HSV-1 skin lesion severity, and that IFN-λ signaling in keratinocytes suppressed CXCL9-mediated neutrophil recruitment to the skin. Furthermore, depleting neutrophils or blocking CXCL9 protected against severe HSV-1 skin lesions in Ifnlr1-/- mice. Altogether, our results suggest that IFN-λ plays an immunomodulatory role in the skin that restricts neutrophil-mediated pathology during HSV infection, and suggest potential applications for IFN-λ in treating viral skin infections.