SARS-CoV-2 is a novel positive-sense single-stranded RNA virus that has caused a recent pandemic. Most patients have a mild disease course, while approximately 20% have moderate to severe disease, often requiring hospitalization and, in some cases, care in the intensive care unit. By investigating a perceived increased rate of indeterminate QuantiFERON-TB Gold Plus results in hospitalized COVID patients, we demonstrate that severely ill COVID-19 patients have at least a 6-fold reduction of interferon gamma (IFN-γ) levels compared to control patients. What is more, over 60% of these severely ill COVID-19 patients' peripheral T cells were found to be unable to produce measurable IFN-γ when stimulated with phytohemagglutinin (PHA), a potent IFN-γ mitogen, reflected by an indeterminate QuantiFERON-TB Gold Plus result. This defect of IFN-γ production was independent of absolute lymphocyte counts and immunosuppressive therapy. It was associated with increased levels of interleukin-6 (IL-6), which was a predictor of patient outcomes for our cohort when measured early in the course of disease. Finally, in a subset of COVID-19 patients, we found elevated IL-10 levels in addition to IL-6 elevation. In addition to finding a significant limitation of interferon-gamma release assay (IGRA) testing in severely ill COVID-19 patients, these data provide evidence that many of these patients demonstrate a focused Th2 immune response with inhibition of IFN-γ signaling and, in many cases, significant elevations of IL-6.