While an appropriately regulated production of interferons (IFNs) performs a fundamental role in the defense against coronaviruses such as severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2), dysregulated overproduction of inflammatory mediators can play an important role in the development of SARS-CoV-2 infection-related complications, such as acute respiratory distress syndrome. As the principal constituents of innate immunity, both type I and III IFNs share antiviral features. However, important properties, including preferential expression at mucosal barriers (such as respiratory tract), local influences, lower receptor distribution, smaller target cell types, noninflammatory effects, and immunomodulatory impacts, were attributed only to type III IFNs. Accordingly, type III IFNs can establish an optimal effective antiviral response, without triggering exaggerated systemic inflammation that is generally attributed to the type I IFNs. However, some harmful effects were attributed to the III IFNs and there are also major differences between human and mouse concerning the immunomodulatory effects of III IFNs. Here, we describe the differential properties of type I and type III IFNs and present a model of IFN response during SARS-COV-2 infection, while highlighting the superior potential of type III IFNs in COVID-19.