SummaryVaccinations against SARS-CoV-2 are effective in COVID-19. However, with limited vaccine access, vaccine hesitancy and variant breakthroughs, there is still a need for effective and safe early treatments. Two community-based clinical trials of the inhaled corticosteroid, budesonide, have recently been published showing and improvement in patients with COVID-19 treated early with budesonide1,2. To understand mechanistically how budesonide was beneficial, inflammatory mediators were assessed in the nasal mucosa of patients recruited to the Steroids in COVID (STOIC1) trial and a cohort of SARS-CoV-2 negative individuals. Here we show that in early COVID-19, elevation in viral response proteins and Th1 and Th2 inflammation occurs. Longitudinal sampling in the natural course of COVID-19 showed persistently high interferon levels and elevated concentrations of the eosinophil chemokine, CCL11. In patients who deteriorate, the initial nasal mucosal signal is characterised by a marked suppression of the early inflammatory response, with reduced concentrations of interferon and inflammatory cytokines, but elevated eosinophil chemokines. Systemic inflammation remained altered in COVID-19 patients, implying that even after symptom resolution, changes in immunological mediators do not resolve. Budesonide treatment decreased IL-33 and IFN-γ, implying a reduction in epithelial damage and dampening of the interferon response. Budesonide treatment also increased CCL17 concentrations, suggesting an improved T-cell response; and significantly alters inflammatory pathways giving further insight into how this treatment can accelerate patient recovery.Abstract Figure