Post-infectious anosmias typically follow death of olfactory sensory neurons (OSNs) with a months-long recovery phase associated with parosmias. While profound anosmia is the leading symptom associated with COVID-19 infection, many patients regain olfactory function within days to weeks without distortions. Here, we demonstrate that sterile induction of anti-viral type I interferon signaling in the mouse olfactory epithelium is associated with diminished odor discrimination and reduced odor-evoked local field potentials. RNA levels of all class I, class II, and TAAR odorant receptors are markedly reduced in OSNs in a non-cell autonomous manner. We find that people infected with COVID-19 rate odors with lower intensities and have odor discrimination deficits relative to people that tested negative for COVID-19. Taken together, we propose that inflammatory-mediated loss of odorant receptor expression with preserved circuit integrity accounts for the profound anosmia and rapid recovery of olfactory function without parosmias caused by COVID-19.