diff --git a/client/schemas/pyrightconfig.schema.json b/client/schemas/pyrightconfig.schema.json
index 3b90b2010..cee61452f 100644
--- a/client/schemas/pyrightconfig.schema.json
+++ b/client/schemas/pyrightconfig.schema.json
@@ -222,6 +222,12 @@
       "title": "Controls reporting input and return parameters whose types are unknown",
       "default": "none"
     },
+    "reportUnknownLambdaType": {
+      "$id": "#/properties/reportUnknownLambdaType",
+      "$ref": "#/definitions/diagnostic",
+      "title": "Controls reporting input and return parameters for lambdas whose types are unknown",
+      "default": "none"
+    },
     "reportUnknownVariableType": {
       "$id": "#/properties/reportUnknownVariableType",
       "$ref": "#/definitions/diagnostic",
diff --git a/docs/configuration.md b/docs/configuration.md
index 0fa82ce4c..ea8e2fc41 100644
--- a/docs/configuration.md
+++ b/docs/configuration.md
@@ -82,7 +82,9 @@ The following settings control pyright’s diagnostic output (warnings or errors
 
 **reportInvalidStringEscapeSequence** [boolean or string, optional]: Generate or suppress diagnostics for invalid escape sequences used within string literals. The Python specification indicates that such sequences will generate a syntax error in future versions. The default value for this setting is 'warning'.
 
-**reportUnknownParameterType** [boolean or string, optional]: Generate or suppress diagnostics for input or return parameters that have an unknown type. The default value for this setting is 'none'.
+**reportUnknownParameterType** [boolean or string, optional]: Generate or suppress diagnostics for input or return parameters for functions or methods that have an unknown type. The default value for this setting is 'none'.
+
+**reportUnknownLambdaType** [boolean or string, optional]: Generate or suppress diagnostics for input or return parameters for lambdas that have an unknown type. The default value for this setting is 'none'.
 
 **reportUnknownVariableType** [boolean or string, optional]: Generate or suppress diagnostics for variables that have an unknown type. The default value for this setting is 'none'.
 
diff --git a/server/src/analyzer/typeAnalyzer.ts b/server/src/analyzer/typeAnalyzer.ts
index c136d7124..a213cfbe9 100644
--- a/server/src/analyzer/typeAnalyzer.ts
+++ b/server/src/analyzer/typeAnalyzer.ts
@@ -590,13 +590,13 @@ export class TypeAnalyzer extends ParseTreeWalker {
                 if (param.name) {
                     const paramType = this._getTypeOfExpression(param.name);
                     if (paramType.category === TypeCategory.Unknown) {
-                        this._addDiagnostic(this._fileInfo.diagnosticSettings.reportUnknownParameterType,
-                            DiagnosticRule.reportUnknownParameterType,
+                        this._addDiagnostic(this._fileInfo.diagnosticSettings.reportUnknownLambdaType,
+                            DiagnosticRule.reportUnknownLambdaType,
                             `Type of '${ param.name.nameToken.value }' is unknown`,
                             param.name);
                     } else if (TypeUtils.containsUnknown(paramType)) {
-                        this._addDiagnostic(this._fileInfo.diagnosticSettings.reportUnknownParameterType,
-                            DiagnosticRule.reportUnknownParameterType,
+                        this._addDiagnostic(this._fileInfo.diagnosticSettings.reportUnknownLambdaType,
+                            DiagnosticRule.reportUnknownLambdaType,
                             `Type of '${ param.name.nameToken.value }', ` +
                             `'${ printType(paramType) }', is partially unknown`,
                             param.name);
@@ -606,12 +606,12 @@ export class TypeAnalyzer extends ParseTreeWalker {
 
             const returnType = this._getTypeOfExpression(node.expression);
             if (returnType.category === TypeCategory.Unknown) {
-                this._addDiagnostic(this._fileInfo.diagnosticSettings.reportUnknownParameterType,
-                    DiagnosticRule.reportUnknownParameterType,
+                this._addDiagnostic(this._fileInfo.diagnosticSettings.reportUnknownLambdaType,
+                    DiagnosticRule.reportUnknownLambdaType,
                     `Type of lambda expression is unknown`, node.expression);
             } else if (TypeUtils.containsUnknown(returnType)) {
-                this._addDiagnostic(this._fileInfo.diagnosticSettings.reportUnknownParameterType,
-                    DiagnosticRule.reportUnknownParameterType,
+                this._addDiagnostic(this._fileInfo.diagnosticSettings.reportUnknownLambdaType,
+                    DiagnosticRule.reportUnknownLambdaType,
                     `Type of lambda expression, '${ printType(returnType) }', is partially unknown`,
                     node.expression);
             }
diff --git a/server/src/common/configOptions.ts b/server/src/common/configOptions.ts
index 7a84b90cb..2d6a3d937 100644
--- a/server/src/common/configOptions.ts
+++ b/server/src/common/configOptions.ts
@@ -123,9 +123,12 @@ export interface DiagnosticSettings {
     // Report usage of invalid escape sequences in string literals?
     reportInvalidStringEscapeSequence: DiagnosticLevel;
 
-    // Report usage of unknown input or return parameters?
+    // Report usage of unknown input or return parameters for functions?
     reportUnknownParameterType: DiagnosticLevel;
 
+    // Report usage of unknown input or return parameters for lambdas?
+    reportUnknownLambdaType: DiagnosticLevel;
+
     // Report usage of unknown input or return parameters?
     reportUnknownVariableType: DiagnosticLevel;
 
@@ -190,6 +193,7 @@ export function getDiagLevelSettings() {
         DiagnosticRule.reportIncompatibleMethodOverride,
         DiagnosticRule.reportInvalidStringEscapeSequence,
         DiagnosticRule.reportUnknownParameterType,
+        DiagnosticRule.reportUnknownLambdaType,
         DiagnosticRule.reportUnknownVariableType,
         DiagnosticRule.reportUnknownMemberType,
         DiagnosticRule.reportCallInDefaultInitializer,
@@ -227,6 +231,7 @@ export function getStrictDiagnosticSettings(): DiagnosticSettings {
         reportIncompatibleMethodOverride: 'error',
         reportInvalidStringEscapeSequence: 'error',
         reportUnknownParameterType: 'error',
+        reportUnknownLambdaType: 'error',
         reportUnknownVariableType: 'error',
         reportUnknownMemberType: 'error',
         reportCallInDefaultInitializer: 'none',
@@ -266,6 +271,7 @@ export function getDefaultDiagnosticSettings(): DiagnosticSettings {
         reportIncompatibleMethodOverride: 'none',
         reportInvalidStringEscapeSequence: 'warning',
         reportUnknownParameterType: 'none',
+        reportUnknownLambdaType: 'none',
         reportUnknownVariableType: 'none',
         reportUnknownMemberType: 'none',
         reportCallInDefaultInitializer: 'none',
@@ -586,6 +592,11 @@ export class ConfigOptions {
                 configObj.reportUnknownParameterType, DiagnosticRule.reportUnknownParameterType,
                 defaultSettings.reportUnknownParameterType),
 
+            // Read the "reportUnknownLambdaType" entry.
+            reportUnknownLambdaType: this._convertDiagnosticLevel(
+                configObj.reportUnknownLambdaType, DiagnosticRule.reportUnknownLambdaType,
+                defaultSettings.reportUnknownLambdaType),
+
             // Read the "reportUnknownVariableType" entry.
             reportUnknownVariableType: this._convertDiagnosticLevel(
                 configObj.reportUnknownVariableType, DiagnosticRule.reportUnknownVariableType,
diff --git a/server/src/common/diagnosticRules.ts b/server/src/common/diagnosticRules.ts
index e15466112..cb17a3781 100644
--- a/server/src/common/diagnosticRules.ts
+++ b/server/src/common/diagnosticRules.ts
@@ -37,6 +37,7 @@ export const enum DiagnosticRule {
     reportIncompatibleMethodOverride = 'reportIncompatibleMethodOverride',
     reportInvalidStringEscapeSequence = 'reportInvalidStringEscapeSequence',
     reportUnknownParameterType = 'reportUnknownParameterType',
+    reportUnknownLambdaType = 'reportUnknownLambdaType',
     reportUnknownVariableType = 'reportUnknownVariableType',
     reportUnknownMemberType = 'reportUnknownMemberType',
     reportCallInDefaultInitializer = 'reportCallInDefaultInitializer',