Treatment-induced control and spontaneous clearance of hepatitis C virus (HCV) infection are affected by various host factors. Polymorphisms in the region of the gene IL28B are associated with HCV clearance, implicating the gene product, interferon (IFN)-λ3, in the immune response to HCV. Although it is not clear how the IL28B haplotype affects HCV clearance, IFN-λ3 up-regulates interferon-stimulated genes, similar to IFN-α and IFN-β but via a different receptor. There is also evidence that IFN-λ3 affects the adaptive immune response. The IL28B genotype can be considered, along with other factors, in predicting patient responses to therapy with pegylated IFN-α and ribavirin. We review the genetic studies that uncovered the association between IL28B and HCV clearance, the biology of IFN-λ3, the clinical implications of the genetic association, and areas of future research.