Severe coronavirus disease 2019 (COVID-19) is characterized by overproduction of immune mediators, but the role of interferons (IFNs) of the type I (IFN-I) or type III (IFN-III) families remains debated. We scrutinized the production of IFNs along the respiratory tract of COVID-19 patients and found that high levels of IFN-III, and to a lesser extent IFN-I, characterize the upper airways of patients with high viral burden but reduced disease risk or severity. Production of specific IFN-III, but not IFN-I, members denotes patients with a mild pathology and efficiently drives the transcription of genes that protect against severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). In contrast, compared to subjects with other infectious or noninfectious lung pathologies, IFNs are overrepresented in the lower airways of patients with severe COVID-19 that exhibit gene pathways associated with increased apoptosis and decreased proliferation. Our data demonstrate a dynamic production of IFNs in SARS-CoV-2-infected patients and show IFNs play opposing roles at distinct anatomical sites. Display omitted •IFN expression in COVID-19 varies based on location, viral load, age, and severity•IFN-λ1 and IFN-λ3 drive protective ISGs in the upper airways of mildly ill patients•Critical patients express IFN-αβ and IFN-λ2 and have low ISGs and high p53 expression•Epithelial cells efficiently produce protective IFN-λ1, while cDCs express IFN-λ2,3 An in-depth analysis of IFNs in COVID-19 reveals differences in their roles based on anatomical location, viral load, age, and disease severity. In the upper respiratory tract, high levels of IFN-III are protective and result in mild disease in spite of higher SARS-CoV-2 viral burden, while the lower airways of patients with severe COVID-19 demonstrate elevated IFN-I and IFN-III, cell death, and a reduction in IFN-stimulated genes.