Interferons (IFNs) produced by airway epithelial cells are crucial in defending against pathogens. Fluctuations in IFN-λ levels may influence coronavirus disease 19 (COVID-19) severity. However, conflicting data have been reported regarding serum IFN-λ concentrations in COVID-19 patients. To address this, we evaluated serum IFN-λ levels over time in moderate and severe COVID-19 patients and their association with cytokine production and clinical parameters using the enzyme-linked immunosorbent assay (ELISA) and the Bio-Plex Pro Human Cytokine 17-plex Assay. Results from testing 51 COVID-19 patients showed that 68% lacked detectable serum IFN-λ. Among non-IFN-λ secretors, severe COVID-19 predominated. In contrast, IFN-λ secretors displayed stable IFN-λ levels in moderate cases, while severe cases showed a decline over time, which persisted even after recovery. A negative correlation was observed between IFN-λ levels and inflammatory markers. This, combined with an increase in tumor necrosis factor alpha (TNF-α) and clinical improvement, suggests a regulatory role for IFN-λ in promoting faster recovery. Despite this, survival rates were similar between the groups, indicating that while IFN-λ influences the course of the disease, it does not directly affect overall survival. In conclusion, IFN-λ is vital, but not unique, for the antiviral response and COVID-19 recovery. Simultaneously, serum IFN-λ deficiency signifies severe COVID-19.