Longitudinal analyses of the innate immune system, including the earliest time points, are essential to understand the immunopathogenesis and clinical course of coronavirus disease (COVID-19). Here, we performed a detailed characterization of natural killer (NK) cells in 205 patients (403 samples; days 2 to 41 after symptom onset) from four independent cohorts using single-cell transcriptomics and proteomics together with functional studies. We found elevated interferon (IFN)-α plasma levels in early severe COVD-19 alongside increased NK cell expression of IFN-stimulated genes (ISGs) and genes involved in IFN-α signaling, while upregulation of tumor necrosis factor (TNF)-induced genes was observed in moderate diseases. NK cells exert anti-SARS-CoV-2 (severe acute respiratory syndrome coronavirus 2) activity but are functionally impaired in severe COVID-19. Further, NK cell dysfunction may be relevant for the development of fibrotic lung disease in severe COVID-19, as NK cells exhibited impaired anti-fibrotic activity. Our study indicates preferential IFN-α and TNF responses in severe and moderate COVID-19, respectively, and associates a prolonged IFN-α-induced NK cell response with poorer disease outcome.