COVID-19 has proven to be a metabolic disease resulting in adverse outcomes in individuals with diabetes or obesity. Patients infected with SARS-CoV-2 and hyperglycemia suffer from longer hospital stays, higher risk of developing acute respiratory distress syndrome (ARDS), and increased mortality compared to those who do not develop hyperglycemia. Nevertheless, the pathophysiological mechanism(s) of hyperglycemia in COVID-19 remains poorly characterized. Here we show that insulin resistance rather than pancreatic beta cell failure is the prevalent cause of hyperglycemia in COVID-19 patients with ARDS, independent of glucocorticoid treatment. A screen of protein hormones that regulate glucose homeostasis reveals that the insulin sensitizing adipokine adiponectin is reduced in hyperglycemic COVID-19 patients. Hamsters infected with SARS-CoV-2 also have diminished expression of adiponectin. Together these data suggest that adipose tissue dysfunction may be a driver of insulin resistance and adverse outcomes in acute COVID-19.