Interstitial lung disease and associated fibrosis occur in a proportion of individuals who have recovered from severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) infection through unknown mechanisms. We studied individuals with severe coronavirus disease 2019 (COVID-19) after recovery from acute illness. Individuals with evidence of interstitial lung changes at 3 to 6 months after recovery had an up-regulated neutrophil-associated immune signature including increased chemokines, proteases, and markers of neutrophil extracellular traps that were detectable in the blood. Similar pathways were enriched in the upper airway with a concomitant increase in antiviral type I interferon signaling. Interaction analysis of the peripheral phosphoproteome identified enriched kinases critical for neutrophil inflammatory pathways. Evaluation of these individuals at 12 months after recovery indicated that a subset of the individuals had not yet achieved full normalization of radiological and functional changes. These data provide insight into mechanisms driving development of pulmonary sequelae during and after COVID-19 and provide a rational basis for development of targeted approaches to prevent long-term complications.