Background/Objectives: Neutralizing autoantibodies against type I interferons, particularly interferon-alpha (IFN-α), have been implicated in severe COVID-19 outcomes. This study investigated the prevalence and functional significance of anti-IFN-α autoantibodies (AAbs) in hospitalized unvaccinated COVID-19 patients and their association with COVID-19 disease severity. Methods: We retrospectively analyzed serum samples from 122 hospitalized COVID-19 patients (asymptomatic/mild: n = 69, moderate: n = 35, severe/critical: n = 18) and 32 healthy uninfected controls. Anti-IFN-α AAbs were quantified using a commercial enzyme-linked immunosorbent assay (ELISA) kit, with functional neutralization assessed via competitive ELISA and STAT1 phosphorylation inhibition. Statistical comparisons were performed using one-way ANOVA for parametric data and the Kruskal–Wallis test for non-parametric variables. Results: Anti-IFN-α AAbs were detected in 24.6% of COVID-19 patients, with all clinical subgroups showing significantly higher titers compared to healthy controls (p < 0.05). Although no significant differences in anti-IFN-α AAb levels were found between mild, moderate, and severe cases, patients with severe or critical COVID-19 had markedly higher mean titers (10,511.3 ng/mL) compared to non-severe (mild + moderate) cases (375.2 ng/mL, p < 0.001). Strongly neutralizing anti-IFN-α AAbs, with high titers (>20,000 ng/mL) and the ability to inhibit STAT1 phosphorylation, were identified in three severe COVID-19 cases. Anti-IFN-α AAb levels correlated positively with CRP (r = 0.80, p < 0.0001), LDH (r = 0.80, p = 0.001), and neutrophil count (r = 0.52, p = 0.003), and negatively with lymphocyte count (r = −0.59, p = 0.0006). Conclusions: Elevated and functionally neutralizing anti-IFN-α AAbs were associated with severe COVID-19. These findings support their role as a risk factor for poor outcomes and emphasize the importance of early COVID-19 vaccination. Screening may help identify high-risk individuals, particularly those unvaccinated or with immune vulnerabilities.