Abstract Staphylococcus aureus is an important human pathogen, in particular the methicillin resistant S. aureus (MRSA) strain USA300 that is epidemic in the United States. Type III interferons (IFN-λ) signal through the IL-28 receptor (IFNLR) located on epithelial cells and neutrophils. Neutrophil-mediated killing is a crucial defence system against S. aureus. Compared to WT mice, Ifnlr−/− mice had significantly improved clearance of S. aureus from the airway and lung tissue (>90%; P<0.001) following a 24-hour infection. In a mortality model of infection, all Ifnlr−/− mice survived, whereas 75% of WT mice succumbed to infection (P<0.05). Despite a lack of difference in neutrophil recruitment to the airway in WT and Ifnlr−/− mice in response to S. aureus, Ifnlr−/− infected mice showed a significant increase in the neutrophil related cytokine G-CSF (38%; P<0.05). Moreover, expression of the neutrophil surface markers, Ly6C and Ly6G, were higher (39% and 20%, respectively; P<0.01) on infected Ifnlr−/− neutrophils compared to WT infected mice. Neutrophils isolated from Ifnlr−/− mice compared to WT neutrophils also displayed a 2-fold increase in MPO activity (peroxidation) (p<0.05) and a 2.1-fold increase in Ca2+ flux when compared to WT neutrophils (P<0.001), while WT neutrophils stimulated with purified IFN-λ displayed a 0.5-fold decrease in Ca2+ flux (p<0.005). In addition, stimulation of WT neutrophils with purified IFN-λ led to a 2-fold decrease of their S. aureus killing capacity (P<0.05). Controlling neutrophil recruitment and activation is important to provide a balanced response to infection. Our data suggests that type III IFN signalling can impair neutrophil activation and their killing capacity in response to S. aureus.