Zika virus (ZIKV) infection during pregnancy in humans results in intrauterine growth restriction, spontaneous abortion, and microcephaly. Here, we found that fetus-derived type I interferon (IFN-I) signaling can enhance anti-ZIKV responses and provide clinical benefits to the fetus. Because IFN-λ shares signaling cascades and antiviral functions with IFN-I, we investigated the in vivo effects of IFN-λ in ZIKV-infected pregnant mice. IFN-λ administration during mid-pregnancy reduced ZIKV burden in maternal and fetal organs and alleviated placental injuries and fetal demise. In addition, prophylactic and therapeutic treatment of IFN-λ1 in a human trophoblast line, as well as in primary human amniotic epithelial cells, greatly reduced the ZIKV burden. Our data highlight IFN-λ1 as a potential therapeutic useful for women at risk for congenital Zika disease.