Type I and III IFNs are structurally related cytokines with similar antiviral functions. They have different genomic organizations and bind to distinct receptor complexes. It has been vigorously debated whether the recently identified intron containing IFN genes in fish and amphibians belong to the type I or III IFN family or diverged from a common ancestral gene, that subsequently gave rise to both types. In this report, we have identified intron containing type III IFN genes that are tandemly linked in the Xenopus tropicalis genome and hence demonstrate for the first time that intron containing type I and III genes diverged relatively early in vertebrate evolution, and at least by the appearance of early tetrapods, a transition period when vertebrates migrated from an aquatic environment to land. Our data also suggest that the intronless type I IFN genes seen in reptiles, birds, and mammals have originated from a type I IFN transcript via a retroposition event that led to the disappearance of intron-containing type I IFN genes in modern vertebrates. In vivo and in vitro studies in this paper show that the Xenopus type III IFNs and their cognate receptor are ubiquitously expressed in tissues and primary splenocytes and can be upregulated by stimulation with synthetic double-stranded RNA, suggesting they are involved in antiviral defense in amphibians.