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The type III interferon (IFNλ) receptor IL-28R is abundantly expressed in the respiratory tract and has been shown essential for host defense against some viral pathogens, however no data are available concerning its role in the innate immune response to bacterial pathogens. Staphylococcus aureus and Pseudomonas aeruginosa induced significant production of IFNλ in the lung, and clearance of these bacteria from the lung was significantly increased in IL-28R null mice compared to controls. Improved bacterial clearance correlated with reduced lung pathology and a reduced ratio of pro- vs anti-inflammatory cytokines in the airway. In human epithelial cells IFNλ inhibited miR-21 via STAT3 resulting in upregulation of PDCD4, a protein known to promote inflammatory signaling. In vivo 18 hours following infection with either pathogen, miR-21 was significantly reduced and PDCD4 increased in the lungs of wild type compared to IL-28R null mice. Infection of PDCD4 null mice with USA300 resulted in improved clearance, reduced pathology, and reduced inflammatory cytokine production. These data suggest that during bacterial pneumonia IFNλ promotes inflammation by inhibiting miR-21 regulation of PDCD4.