Type III interferons (λ1, λ2, and λ3) are potent antiviral cytokines in the lung. However, their roles in nonviral lung injuries are less well understood. This study investigates the activation of type III interferon signaling in three distinct models of lung injuries caused by diverse stimuli: the bacterial pathogen Pseudomonas aeruginosa, bacterial endotoxin LPS, and the chemotherapeutic agent bleomycin. Our data show that, despite inducing a potent inflammatory response, Pseudomonas and LPS did not increase IFNλ secretion. In contrast, bleomycin instillation increased secretion of IFNλ in the airways at both early and late time points. Consistent with limited secretion, type III interferon signaling had a minimal role in the host response to both Pseudomonas and LPS, as measured by pathogen burden, inflammatory response, and lung injury. Conversely, a deficiency in type III interferon signaling led to increased inflammatory signaling and elevated acute lung injury in the bleomycin model on day 3. This elevated early injury resulted in impaired recovery in IFNLR1 knockout mice, as evidenced by their recovery from bleomycin‐induced weight loss. Taken together, these data suggest a context‐specific activation of type III interferon signaling, where it plays an anti‐inflammatory role in the lung.