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Respiratory failure is the leading cause of death in patients with severe SARS-CoV-2 infection 1,2 , but the host response at the lung tissue level is poorly understood. Here we performed single-nucleus RNA sequencing of about 116,000 nuclei from the lungs of nineteen individuals who died of COVID-19 and underwent rapid autopsy and seven control individuals. Integrated analyses identified substantial alterations in cellular composition, transcriptional cell states, and cell-to-cell interactions, thereby providing insight into the biology of lethal COVID-19. The lungs from individuals with COVID-19 were highly inflamed, with dense infiltration of aberrantly activated monocyte-derived macrophages and alveolar macrophages, but had impaired T cell responses. Monocyte/macrophage-derived interleukin-1β and epithelial cell-derived interleukin-6 were unique features of SARS-CoV-2 infection compared to other viral and bacterial causes of pneumonia. Alveolar type 2 cells adopted an inflammation-associated transient progenitor cell state and failed to undergo full transition into alveolar type 1 cells, resulting in impaired lung regeneration. Furthermore, we identified expansion of recently described CTHRC1 + pathological fibroblasts 3 contributing to rapidly ensuing pulmonary fibrosis in COVID-19. Inference of protein activity and ligand-receptor interactions identified putative drug targets to disrupt deleterious circuits. This atlas enables the dissection of lethal COVID-19, may inform our understanding of long-term complications of COVID-19 survivors, and provides an important resource for therapeutic development.