Type-III interferon (IFN-λ), the most recently discovered family of IFNs, shares common features with type I IFNs, but also has many distinctive activities. It is not clear that whether IFN-λ has additional antiviral mechanisms. In this study, we investigated the effects of IFN-λ on autophagy, a cellular process closely related to hepatitis C virus (HCV) infection in human hepatoma Huh7 cells. Our results showed that IFN-λ1 treatment inhibit autophagic activity in Huh7 cells, as evidenced by the decreased expression of microtubule-associated protein 1 light chain 3B (LC3B)-II and conversion of LC3B-I to LC3B-II, decreased formation of GFP-LC3 puncta and accumulation of autophagosomes. IFN-λ1 could also inhibit HCV-induced or tunicamycin (a known inducer of autophagy with similar mechanism to HCV infection) -induced LC3B-II expression and autophagosome formation. Through PCR array, real time RT PCR, and western blot, two autophagy-related genes, ATG5 and GABARAP, were identified and verified to be down-regulated by IFN-λ1 treatment, either in HCV-uninfected Huh7 cells or in HCV JFH-1-infected cells. Overexpression of ATG5 and/or GABARAP could partly recover the IFN-λ1-inhibited HCV replication. Mechanism research demonstrated that IFN-λ1 could induce the expression of miR-181a and miR-214 (targeting ATG5 and GABARAP respectively), by which down-regulates ATG5 and GABARAP expression. Taken together, our results indicate that suppression of the autophagy response by IFN-λ1 contributes to IFN-λ1 anti-HCV activity. The results also provide a theoretical basis for improving the effectiveness of IFN treatment of HCV infection through inhibition of the HCV-induced autophagy response.