Human metapneumovirus (HMPV) is a common respiratory pathogen and often contributes to severe disease, particularly in children, immunocompromised people, and the elderly. There are currently no licensed HMPV antiviral treatments or vaccines. Here, we report novel roles of host factor IFN-λ in HMPV disease that highlight therapeutic potential. We show that IFN-λ promotes lung antiviral responses by restricting lung HMPV replication and spread from upper to lower airways but does so without inducing lung immunopathology. Our data uncover recruitment of lung macrophages, regulation of ciliated epithelial cells, and modulation of inflammatory cytokines and interferon-stimulated genes as likely contributors. Moreover, we found these roles to be distinct and non-redundant, as they are not observed with knockout of, or treatment with, type I IFN. These data elucidate unique antiviral functions of IFN-λ and suggest IFN-λ augmentation as a promising therapeutic for treating HMPV disease and promoting effective vaccine responses.