Multiple myeloma (MM) patients have increased risk of severe coronavirus disease 2019 (COVID-19) when infected by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). Monoclonal gammopathy of undetermined significance (MGUS), the precursor of MM has been associated with immune dysfunction which may lead to severe COVID-19. No systematic data have been published on COVID-19 in individuals with MGUS. We conducted a large population-based cohort study evaluating the risk of SARS-CoV-2 infection and severe COVID-19 among individuals with MGUS. We included 75,422 Icelanders born before 1976, who had been screened for MGUS in the Iceland Screens Treats or Prevents Multiple Myeloma study (iStopMM). Data on SARS-CoV-2 testing and COVID-19 severity were acquired from the Icelandic COVID-19 Study Group. Using a test-negative study design, we included 32,047 iStopMM participants who had been tested for SARS-CoV-2, of whom 1754 had MGUS. Among these participants, 1100 participants, tested positive, 65 of whom had MGUS. Severe COVID-19 developed in 230 participants, including 16 with MGUS. MGUS was not associated with SARS-CoV-2 infection (Odds ratio (OR): 1.05; 95% confidence interval (CI): 0.81–1.36; p = 0.72) or severe COVID-19 (OR: 0.99; 95%CI: 0.52–1.91; p = 0.99). These findings indicate that MGUS does not affect the susceptibility to SARS-CoV-2 or the severity of COVID-19.