The global pandemic of severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2)-driven coronavirus disease 2019 (COVID-19) has caused unprecedented human death and has seriously threatened the global economy. Early data suggest a surge in proinflammatory cytokines in patients with severe COVID-19, which has been associated with poor outcomes. We recently postulated that the inflammatory response in patients with severe COVID-19 disease is not inhibited by natural killer (NK) cells, resulting in a "cytokine storm." Here, we assessed the NK-cell functional activity and the associated cytokines and soluble mediators in hospitalized COVID-19 patients. Significantly impaired NK-cell counts and cytolytic activity were observed in COVID-19 patients when compared with healthy controls. Also, cytokines like interleukin 12 (IL12), IL15, and IL21 that are important for NK-cell activity were not detected systematically. Serum concentrations of soluble CD25 (sCD25)/soluble IL2 receptor alpha (sIL2-Ralpha) were significantly elevated and were inversely correlated with the percentage of NK cells. Impaired NK-cell cytolytic activity together with other laboratory trends including elevated sCD25 were consistent with a hyperinflammatory state in keeping with macrophage-activation syndrome. Our findings suggest that impaired counts and cytolytic activity of NK cells are important characteristics of severe COVID-19 and can potentially facilitate strategies for immunomodulatory therapies.