Upon viral infection, the release of type I interferons (IFNs) plays a crucial role in limiting viral replication, reducing tissue damage, and boosting both innate and adaptive immune responses. A plasmacytoid dendritic cell (pDC) is a professional type I IFN-producing cell with the ability to produce large amounts of type I IFN quickly. However, when pDCs experience dysfunction or impairment in their ability to produce type I IFNs, the susceptibility to severe viral infections increases. Patients with severe COVID-19, caused by the severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2), exhibit lower levels of pDCs and diminished type I IFN responses compared to individuals with mild or asymptomatic disease. This association between severe COVID-19 and compromised IFN responses extends beyond underlying chronic illnesses. This review will also discuss the dysregulation of the pDC/type I IFN axis in COVID-19 and highlight the critical role of type I IFN-dependent factors contributing to the severity of COVID-19. Additionally, the impact of the IFN signature on a patient’s immune response to SARS-CoV-2 infection will be investigated.