We report the emergence of a novel lineage of SARS-CoV-2 in South America, termed C.37. It presents seven nonsynonymous mutations in the Spike gene (Δ247-253, G75V, T76I, L452Q, F490S, T859N) and a deletion in the ORF1a gene (Δ3675-3677) also found in variants of concern (VOCs) Alpha, Beta, and Gamma. Initially reported in Lima, Peru, in late December 2020, it now accounts for 97% of Peruvian public genomes in April 2021. It is expanding in Chile and Argentina, and there is evidence of onward transmission in Colombia, Ecuador, Mexico, the USA, Germany, and Israel. On June 15, 2021, the World Health Organization designated C.37 as Variant of Interest (VOI) Lambda.