Early in the COVID-19 pandemic, type 2 diabetes (T2D) was marked as a risk factor for severe disease and mortality. Inflammation is central to the aetiology of both conditions where variations in immune responses can mitigate or aggravate disease course. Identifying at-risk groups based on immunoinflammatory signatures is valuable in directing personalised care and developing potential targets for precision therapy. This observational study characterised immunophenotypic variation associated with COVID-19 severity in T2D. Broad-spectrum immunophenotyping quantified 15 leucocyte populations in peripheral circulation from a cohort of 45 hospitalised COVID-19 patients with and without T2D. Lymphocytopenia and specific loss of cytotoxic CD8 + lymphocytes were associated with severe COVID-19 and requirement for intensive care in both non-diabetic and T2D patients. A morphological anomaly of increased monocyte size and monocytopenia restricted to classical CD14 Hi CD16 À monocytes was specifically associated with severe COVID-19 in patients with T2D requiring intensive care. Increased expression of inflammatory markers reminiscent of the type 1 interferon pathway (IL6, IL8, CCL2, INFB1) underlaid the immunophenotype associated with T2D. These immunophenotypic and hyperinflammatory changes may contribute to increased voracity of COVID-19 in T2D. These findings allow precise identification of T2D patients with severe COVID-19 as well as provide evidence that the type 1 interferon pathway may be an actionable therapeutic target for future studies.