Genomic regions have been associated with COVID-19 susceptibility and outcomes, including the chr12q24.13 locus encoding antiviral proteins OAS1-3. Here, we report genetic, functional, and clinical insights into genetic associations within this locus. In Europeans, the risk of hospitalized vs. non-hospitalized COVID-19 was associated with a single 19Kb-haplotype comprised of 76 OAS1 variants included in a 95% credible set within a large genomic fragment introgressed from Neandertals. The risk haplotype was also associated with impaired spontaneous but not treatment-induced SARS-CoV-2 clearance in a clinical trial with pegIFN-λ1. We demonstrate that two exonic variants, rs10774671 and rs1131454, affect splicing and nonsense-mediated decay of OAS1 . We suggest that genetically-regulated loss of OAS1 expression contributes to impaired spontaneous clearance of SARS-CoV-2 and elevated risk of hospitalization for COVID-19. Our results provide the rationale for further clinical studies using interferons to compensate for impaired spontaneous SARS-CoV-2 clearance, particularly in carriers of the OAS1 risk haplotypes.