In COVID-19 neurological alterations are noticed during the systemic viral infection. Various pathophysiological mechanisms on the central nervous system (CNS) have been suggested in the past two years, including the viral neurotropism hypothesis. Nevertheless, neurological complications can also occur independent of neurotropism and at different stages of the disease and may be persistent. Previous autopsy studies of the CNS from patients with severe COVID-19 show infiltration of macrophages and T lymphocytes, especially in the perivascular regions as well as pronounced microglial activation, but without signs of viral encephalitis. However, there is an ongoing debate about long-term changes and cytotoxic effects in the CNS due to the systemic inflammation. Here, we show the brain-specific host response during and after COVID-19. We profile single-nucleus transcriptomes and proteomes of brainstem tissue from deceased COVID-19 patients who underwent rapid autopsy. We detect a disease phase-dependent inflammatory type-I interferon response in acute COVID-19 cases. Integrating single-nucleus RNA sequencing and spatial transcriptomics, we could localize two patterns of reaction to severe systemic inflammation. One neuronal with direct focus on cranial nerve nuclei and one diffusely affecting the whole brainstem, the latter reflecting a bystander effect that spreads throughout the vascular unit and alters the transcriptional state of oligodendrocytes, microglia and astrocytes. Our results indicate that even without persistence of SARS-CoV-2 in the CNS, the tissue activates highly protective mechanisms, which also cause functional disturbances that may explain the neurological symptoms of COVID-19, triggered by strong systemic type-I IFN signatures in the periphery.