In viral disease, infection is controlled at the cellular level by type I interferon (IFN-I), but dengue virus (DENV) has the ability to inhibit this response. Type III interferon, also known as lambda IFN (IFN-III or IFN-λ), is a complementary pathway to the antiviral response by IFN-I. This work analyzed the IFN-λ (IFN-III) mediated antiviral response against DENV serotype 2 (DENV-2) infection. Dengue fever patients were sampled to determine their IFN-λ levels by ELISA. To study the IFN-λ response during DENV infection we selected the epithelial cell line C33-A, and we demonstrated that it is permissive to DENV-2 infection. The effect of IFN-λ on virus replication was determined in these cells, in parallel to the expression of IFN-stimulated genes (ISGs), and Suppressor of Cytokine Signaling (SOCS), genes measured by RT-qPCR. We found increased (~1.8 times) serological IFN-λ in dengue fever patients compared to healthy blood donors. IFN-λ inhibited DENV-2 replication in a dose-dependent manner in vitro. The reduction of viral titer corresponded with increased ISG mRNA levels (MX1 and OAS1), with the highest inhibition occurring at ISG's peak expression. Presence of IFN-negative regulators, SOCS1 and SOCS3, during DENV-2 infection was associated with reduced IFN-λ1 expression. Evidence described here suggests that IFN-λ is a good candidate inhibitor of viral replication in dengue infection. Mechanisms for the cellular and organismal interplay between DENV and IFN- λ need to be further studied as they could provide insights into strategies to treat this disease. Furthermore, we report a novel epithelial model to study dengue infection in vitro.