•Dyspnoea persists in many patients following COVID-19 infection.•COVID-19 patients with persistent dyspnoea have impaired spirometry and gas exchange.•COVID-19 patients with persistent dyspnoea have reduced exercise performance. The purpose of this study was to examine the physiological mechanisms of persistent dyspnoea in COVID-19 survivors. Non-critical patients (n = 186) with varying degrees of COVID-19 severity reported persistent symptoms using a standardized questionnaire and underwent pulmonary function and 6-minute walk testing between 30 and 90 days following the onset of acute COVID-19 symptoms. Patients were divided into those with (n = 70) and without (n = 116) persistent dyspnoea. Patients with persistent dyspnoea had significantly lower FVC (p = 0.03), FEV1 (p = 0.04), DLCO (p = 0.01), 6-minute walk distance (% predicted, p = 0.03), and end-exercise oxygen saturation (p < 0.001), and higher Borg 0-10 ratings of dyspnoea and fatigue (both p < 0.001) compared to patients without persistent dyspnoea. We have shown that dyspnoea is a common persistent symptom across varying degrees of initial COVID-19 severity. Patients with persistent dyspnoea had greater restriction on spirometry, lower DLCO, reduced functional capacity, and increased exertional desaturation and symptoms. This suggests that there is a true physiological mechanism that may explain persistent dyspnoea after COVID-19.