Peripheral blood smear (PBS) changes in coronavirus disease 2019 (COVID‐19) are diverse and have been reported in the literature in the form of case series with relatively smaller sample sizes and with a handful of studies showing the association between PBS and clinical severity. This study aims to highlight the numerical and morphological changes in peripheral blood of COVID‐19 patients and to compare the same in intensive care unit (ICU) and non‐ICU settings as well as with disease severity and outcome. The study included 80 COVID‐19 positive (41 ICU and 39 non‐ICU) patients and 32 COVID‐19 negative ICU patients. Complete blood counts (CBCs) and PBS findings were studied and scored by two pathologists blindfolded. Absolute lymphocyte count (ALC) and absolute eosinophil count (AEC) were significantly lower in COVID‐19 positive cases as compared to the COVID‐19 negative group (
p
= 0.001 and
p
= 0.001). COVID‐19 positive group showed significant left myeloid shift (
p
= 0.021), Dohle bodies (
p
= 0.025) with significant prominence of acquired pseudo–Pelger–Huët anomaly, ring‐shaped neutrophils, monolobate neutrophils, and plasmacytoid lymphocytes as compared to control group (
p
= 0.000,
p
= 0.009,
p
= 0.046, and
p
= 0.011, respectively). The overall mean white blood cell (WBC) counts were higher in COVID‐19 positive ICU patients as compared to non‐ICU COVID patients with significant shift to left, presence of ring‐shaped neutrophils, monocyte vacuolation, and large granular lymphocytes (
p
= 0.017,
p
= 0.007,
p
= 0.008, and
p
= 0.004, respectively). Deceased group showed significantly higher WBC count (
p
= 0.018) with marked neutrophilia (
p
= 0.024) and toxic granulation (
p
= 0.01) with prominence of monocyte vacuolization, ring‐shaped neutrophils, large granular lymphocytes, and reactive lymphocytes. Parameters like myeloid left shift, ring‐shaped neutrophils, monocyte vacuolation, and large granular lymphocytes emerged as highly sensitive markers of disease severity. Therefore, serial CBC with comprehensive PBS analysis should be done in every newly diagnosed hospitalized COVID‐19 patient which potentially predicts the course of the disease.