Immune responses to respiratory viruses like SARS-CoV-2 originate and function in the lung, yet assessments of human immunity are often limited to blood. Here, we conducted longitudinal, high-dimensional profiling of paired airway and blood samples from patients with severe COVID-19, revealing immune processes in the respiratory tract linked to disease pathogenesis. Survival from severe disease was associated with increased CD4$^+$ T cells and decreased monocyte/macrophage frequencies in the airway, but not in blood. Airway T cells and macrophages exhibited tissue-resident phenotypes and activation signatures, including high level expression and secretion of monocyte chemoattractants CCL2 and CCL3 by airway macrophages. By contrast, monocytes in blood expressed the CCL2-receptor CCR2 and aberrant CD163$^+$ and immature phenotypes. Extensive accumulation of CD163$^+$ monocyte/macrophages within alveolar spaces in COVID-19 lung autopsies suggested recruitment from circulation. Our findings provide evidence that COVID-19 pathogenesis is driven by respiratory immunity, and rationale for site-specific treatment and prevention strategies.