Pre-existing anti-interferon alpha (anti-IFN-α) autoantibodies in blood are associated with susceptibility to life-threatening COVID-19. However, it is unclear whether anti-IFN-α autoantibodies in the airways -- the initial site of infection -- can also determine disease outcomes. In this study, we developed a new multiparameter technology, flowBEAT, to quantify and profile the isotypes of anti-IFN-α and anti-SARS-CoV-2 antibodies in longitudinal samples collected over 20 months from the airway and matching blood of 129 donors with mild, moderate, and severe COVID-19. We found unexpectedly that nasal anti-IFN-α autoantibodies were induced post-infection onset in more than 70% of mild to moderate COVID-19 cases and associated with robust anti-SARS-CoV-2 immunity, fewer symptoms, and efficient recovery. Nasal anti-IFN-α autoantibodies followed the peak of host IFN-α production and waned with disease recovery, revealing a regulated balance between IFN-α and anti-IFN-α response. Notably, only a subset of mild to moderate patients progressed to develop systemic anti-IFN-α, which correlated with systemic inflammation and worsened symptoms. In contrast, patients with life-threatening COVID-19 sustained elevated anti-IFN-α in both airways and blood, coupled with uncontrolled viral load and IFN-α production. Our studies thereby reveal a novel protective role for nasal anti-IFN-α autoantibodies in the immunopathology of COVID-19 and, more broadly, suggest that anti-IFN-α may serve an important regulatory function to restore homeostasis following viral invasion of the respiratory mucosa.