Type I and III interferons (IFNs) constitute the host system’s first line of defense against viral infections. Although the two families form distinct heterodimeric receptor complexes, the ligand-inducible signals are believed to be propagated through an identical Janus kinase (JAK)-mediated intracellular signaling pathway. Consequently, type I and III IFNs activate a largely overlapping set of interferon stimulated genes (ISGs), eliciting similar biological responses. Despite the apparent overlap in the signaling pathway and functions, the two families of IFN exhibit a pattern of spatiotemporal division of labor that serves to provide a protective state of immunity whilst minimizing collateral damage due to unabated inflammation. Type III IFNs are attractive alternatives to type I IFNs as therapeutics because of their tissue specificity and lower systemic toxicity. However, type III IFNs are significantly less potent than type I IFNs in their physiological activities. Previous studies have described the stability of extracellular receptor-ligand complex and receptor expression levels as factors contributing to the potency gap between type I and III IFNs. Here, we probe the intracellular receptor-JAK (Janus kinase) interactions to further account for the differences between type I vs III IFN signaling. Two facets of the receptor-JAK axis are examined –1) the affinity of the receptor- JAK interactions, and 2) the relative geometry of the proximal JAKs within a signaling complex. To interrogate the effects of the former, we engineered high-affinity cytokine receptors toward their associated JAKs and assayed the changes in downstream signaling. Our results indicate that while the native IFN-αR1-TYK2 affinity is low, the affinity is relatively higher than that of the IL-10Rβ-TYK2 interaction. We show that the signaling potency of type III IFNs can be significantly improved by improving the affinity between the IL-10Rβ receptor and TYK2 whereas the type I IFN signaling is unchanged when the affinity of IFN-αR1 toward TYK2 is enhanced. In order to evaluate the role of receptor geometry in IFN signaling, we induced IFNλ non-responsive cell lines to express either the wild-type or mutant IFN-λR1 receptors with a specified number of alanines inserted into the transmembrane domain. Such alanine insertion mutagenesis approach enables direct assaying of downstream signaling and biological activities of type III IFNs as a function of JAK- JAK geometry within a complex. We have identified three biophysical properties of the IFNλ signaling complex that limit its signaling potency – 1) the affinity of the extracellular receptor complex, 2) lL-10Rβ/TYK2 affinity, and 3) the relative JAK1/TYK2 geometry. Based on our cell-based assays, we report near equivalent functional activities between type I and III IFNs by simultaneously optimizing the affinity of the extracellular receptor complex and JAK- JAK geometry. We believe that our findings will not only guide future efforts in understanding IFN biology and serve as a model system of cytokine signaling but also provide novel strategies for successful applications of type III IFNs in clinics.