The theory of cancer immunoediting refers to mechanisms by which the immune system can suppress or promote tumour progression. A major challenge for the development of novel cancer immunotherapies is to find ways to exploit the immune system's antitumour activity while concomitantly reducing its protumour activity. Using the PyVmT model of mammary tumourigenesis, we show that lack of the Usp18 gene significantly inhibits tumour growth by creating a tumour-suppressive microenvironment. Generation of this antitumour environment is driven by elevated secretion of the potent T-cell chemoattractant Cxcl10 by Usp18 deficient mammary epithelial cells (MECs), which leads to recruitment of Th1 subtype CD4+ T cells. Furthermore, we show that Cxcl10 upregulation in MECs is promoted by interferon-λ and that Usp18 is a novel inhibitor of interferon-λ signalling. Knockdown of the interferon-λ specific receptor subunit IL-28R1 in Usp18 deficient MECs dramatically enhances tumour growth. Taken together, our data suggest that targeting Usp18 may be a viable approach to boost antitumour immunity while suppressing the protumour activity of the immune system.