Conjugation of the ubiquitin-like protein ISG15 to targets (ISGylation) benefits antiviral defense. However, SARS-CoV-2 induces human macrophages to preferentially secrete ISG15 via its papain-like protease, and extracellular non-conjugated ISG15 acts as a cytokine to exacerbate SARS-CoV-2-triggered inflammation.