The natural history of recovery from severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) remains unknown. Because fibrosis with persistent physiological deficit is a previously described feature of patients recovering from similar coronaviruses, treatment represents an early opportunity to modify the disease course, potentially preventing irreversible impairment. Determine the incidence of and describe the progression of persistent inflammatory interstitial lung disease (ILD) following SARS-CoV-2 when treated with prednisolone. A structured assessment protocol screened for sequelae of SARS-CoV-2 pneumonitis. Eight hundred thirty-seven patients were assessed by telephone 4 weeks after discharge. Those with ongoing symptoms had outpatient assessment at 6 weeks. Thirty patients diagnosed with persistent interstitial lung changes at a multidisciplinary team meeting were reviewed in the interstitial lung disease service and offered treatment. These patients had persistent, nonimproving symptoms. At 4 weeks after discharge, 39% of patients reported ongoing symptoms (325/837) and were assessed. Interstitial lung disease, predominantly organizing pneumonia, with significant functional deficit was observed in 35/837 survivors (4.8%). Thirty of these patients received steroid treatment, resulting in a mean relative increase in transfer factor following treatment of 31.6% (standard deviation [SD] ± 27.6,  < 0.001), and forced vital capacity of 9.6% (SD ± 13.0,  = 0.014), with significant symptomatic and radiological improvement. Following SARS-CoV-2 pneumonitis, a cohort of patients are left with both radiological inflammatory lung disease and persistent physiological and functional deficit. Early treatment with corticosteroids was well tolerated and associated with rapid and significant improvement. These preliminary data should inform further study into the natural history and potential treatment for patients with persistent inflammatory ILD following SARS-CoV-2 infection.