Background Since the onset of the COVID-19 pandemic, multiple studies have reported a bidirectional between COVID-19 and dysfunction of the thyroid gland. These studies have identified various forms of thyroid dysfunction that have been found to affect the severity and outcome of COVID-19 infection. However, the data from these studies have been inconsistent and conflicting. Our objective was to assess the prevalence of various types of thyroid dysfunction among moderate to severe cases of COVID-19 pneumonia. In addition, the study aimed to evaluate the outcome of thyroid dysfunction after recovery from COVID-19 infection. Patient and methods In this observational prospective study data on the clinical features of individuals with moderate to severe COVID-19 pneumonia who were admitted to Zagazig University isolation hospitals from April to December 2022 and their laboratory results were gathered and examined. Thyroid function tests, including TSH, FT3, and FT4, were conducted for all patients upon admission. Follow-up testing was performed on patients who initially had aberrant thyroid lab results 90 days after recovering from COVID-19 infection. Results The study comprised a total of 136 patients who had moderate (44.1%) to severe (55.9%) COVID-19 infection. Sick euthyroid syndrome was the most prevalent form of thyroid dysfunction, accounting for 58.7% of patients with thyroid disorders on admission. After 90 days of post-COVID-19 examination, thyroid dysfunction recovery was observed in 61% of cases. A statistically significant correlation was noted between the severity of COVID-19 and the levels of TSH, free T3, and the ratio of free T3 to T4. A large percentage of patients who showed complete recovery had sick euthyroid syndrome. All patients diagnosed with primary hypothyroidism maintained their hypothyroidism condition, whereas those with hyperthyroidism showed complete recovery. Conclusion COVID-19 patients may experience several patterns of thyroid dysfunction, including nonthyroidal illness syndrome. These dysfunctions are associated with the intensity of the inflammatory response and the severity of the COVID-19 infection. Nevertheless, these alterations are predominantly reversible upon recovery from a COVID- 19 infection.