Pattern recognition receptors (PRRs) and interferons (IFNs) serve as essential antiviral defense against SARS-CoV-2, the causative agent of the COVID-19 pandemic. Type III IFNs (IFN-λ) exhibit cell-type specific and long-lasting functions in auto-inflammation, tumorigenesis, and antiviral defense. Here, we identify the deubiquitinating enzyme USP22 as central regulator of basal IFN-λ secretion and SARS-CoV-2 infections in human intestinal epithelial cells (hIECs). USP22-deficient hIECs strongly upregulate genes involved in IFN signaling and viral defense, including numerous IFN-stimulated genes (ISGs), with increased secretion of IFN-λ and enhanced STAT1 signaling, even in the absence of exogenous IFNs or viral infection. Interestingly, USP22 controls basal and 2'3'-cGAMP-induced STING activation and loss of STING reversed STAT activation and ISG and IFN-λ expression. Intriguingly, USP22-deficient hIECs are protected against SARS-CoV-2 infection, viral replication, and the formation of de novo infectious particles, in a STING-dependent manner. These findings reveal USP22 as central host regulator of STING and type III IFN signaling, with important implications for SARS-CoV-2 infection and antiviral defense.