SARS-CoV-2 is a novel coronavirus that causes acute respiratory distress syndrome (ARDS), death and long-term sequelae. Innate immune cells are critical for host defense but are also the primary drivers of ARDS. The relationships between innate cellular responses in ARDS resulting from COVID-19 compared to other causes of ARDS, such as bacterial sepsis is unclear. Moreover, the beneficial effects of dexamethasone therapy during severe COVID-19 remain speculative, but understanding the mechanistic effects could improve evidence-based therapeutic interventions. To interrogate these relationships, we developed an scRNAseq atlas that is freely accessible (biernaskielab.ca/COVID_neutrophil). We discovered that compared to bacterial ARDS, COVID-19 was associated with distinct neutrophil polarization characterized by either interferon (IFN) or prostaglandin (PG) active states. Neutrophils from bacterial ARDS had higher expression of antibacterial molecules such as PLAC8 and CD83. Dexamethasone therapy in COVID patients rapidly altered the IFNactive state, downregulated interferon responsive genes, and activated IL1R2+ve neutrophils. Dexamethasone also induced the emergence of immature neutrophils expressing immunosuppressive molecules ARG1 and ANXA1, which were not present in healthy controls. Moreover, dexamethasone remodeled global cellular interactions by changing neutrophils from information receivers into information providers. Importantly, male patients had higher proportions of IFNactive neutrophils and a greater degree of steroid-induced immature neutrophil expansion. Indeed, the highest proportion of IFNactive neutrophils was associated with mortality. These results define neutrophil states unique to COVID-19 when contextualized to other life-threatening infections, thereby enhancing the relevance of our findings at the bedside. Furthermore, the molecular benefits of dexamethasone therapy are also defined. The identified molecular pathways can now be targeted to develop improved therapeutics.