Host immunity to infection with SARS-CoV-2 is highly variable, dictating diverse clinical outcomes ranging from asymptomatic to severe disease and death. We previously reported that reduced blood type I interferon (IFN-I) in severe COVID-19 patients preceded clinical worsening. These results were supported by studies which identified genetic mutations in loci of the TLR3- or TLR7-dependent IFN-I pathways, or autoantibodies neutralizing IFNα or IFNω, as major risk factors for development of severe and critical COVID-19 pneumonia. Here, we analyzed a range of IFN-I associated responses in patient cohorts with different severities of COVID-19, showing that baseline plasma IFNα measures differed significantly according to the immunoassay used, as well as timing of sampling, the IFNα subtype measured, and the presence of autoantibodies. We then compared immune responses induced by ex vivo stimulation between non-hospitalized moderate cases (n=27) and hospitalized (n=17) adult patients that required oxygen supplementation. This showed a consistently reduced induction of IFN-I proteins in hospitalized COVID-19 patients upon stimulation, that was not associated with detectable neutralizing autoantibodies against IFNα or IFNω. We confirmed the poor induction of IFN-I in an independent patient cohort (n=33), and showed it was more pronounced with severe disease. Intracellular proteomic analysis showed that while monocyte numbers were increased in hospitalized COVID-19 patients, they did not secrete IFN-I in response to stimulation. This was further confirmed by ex vivo whole blood stimulation with IFN-I which induced a transcriptomic response associated with inflammation in hospitalized COVID-19 patients, that was not seen in controls or non-hospitalized moderate cases. These results may explain the dichotomy of the poor clinical response to IFN-I based treatments in late stage COVID-19, despite the critical importance of IFN-I in early acute infection. An improved understanding of such variable responses to treatment may help to identify potential alternative therapeutic strategies.