A 58-year-old male patient presented our emergency department with symptoms of fever and cough of one-week duration. CT scan images of the patient's chest were suggestive of "Coronavirus disease 2019 Reporting and Data System" score of 5, CT severity score of 16 out of 25, and an oxygen saturation of 95% with a positive reverse transcription polymerase chain reaction test for SARS-CoV-2. The patient was administered medications Remdesivir and Methylprednisolone as per the guidelines. He developed altered sensorium during his stay in the hospital and was electively intubated. MRI of the Brain (Plain and Contrast) showed bilateral cerebellar, parietooccipital hyperintensities on T2/fluid-attenuated inversion recovery mode. Cerebrospinal fluid (CSF) showed five cells (100% lymphocytes), normal protein and glucose. The patient was non-responsive to the standard COVID management guidelines. In suspicion of viral encephalitis/acute disseminated encephalomyelitis, intravenous immunoglobulins (IVIG) were administered for five days. A steady improvement was observed in the patient's sensorium over a period of seven days following IVIG therapy, and the patient was able to walk with support following infusion. This case report suggests the possibility of an immune-mediated encephalitis with COVID-19 and the beneficial role of IVIG in treating the same.