There is an urgent need to better understand the pathophysiology of Coronavirus disease 2019 (COVID-19), the global pandemic caused by SARS-CoV-2, which has infected more than three million people worldwide1. Approximately 20% of patients with COVID-19 develop severe disease and 5% of patients require intensive care2. Severe disease has been associated with changes in peripheral immune activity, including increased levels of pro-inflammatory cytokines3,4 that may be produced by a subset of inflammatory monocytes5,6, lymphopenia7,8 and T cell exhaustion9,10. To elucidate pathways in peripheral immune cells that might lead to immunopathology or protective immunity in severe COVID-19, we applied single-cell RNA sequencing (scRNA-seq) to profile peripheral blood mononuclear cells (PBMCs) from seven patients hospitalized for COVID-19, four of whom had acute respiratory distress syndrome, and six healthy controls. We identify reconfiguration of peripheral immune cell phenotype in COVID-19, including a heterogeneous interferon-stimulated gene signature, HLA class II downregulation and a developing neutrophil population that appears closely related to plasmablasts appearing in patients with acute respiratory failure requiring mechanical ventilation. Importantly, we found that peripheral monocytes and lymphocytes do not express substantial amounts of pro-inflammatory cytokines. Collectively, we provide a cell atlas of the peripheral immune response to severe COVID-19.