Reduced diffusion capacity (DLCO) after COVID 19 pneumonia was reported in hospitalised patients after discharge. Here, we studied the restoration of DLCO over a 24 months period in COVID-19 pneumonia survivors (n = 317), who were categorised into "moderate" cases (no oxygen supply; no need for hospitalisation), "severe" cases (respiratory frequency > 30/min and/or peripheral oxygen SpO2 < 93%), and "critical" cases (respiratory failure and admission into the intensive care unit). COVID-19 pneumonia survivors with a decreased DLCO (<80%) at 3 months (n = 133) were invited for 6- and 24-months follow-up. At 3 months, impairment of DLCO was more severe in critical case (p < .01). Over time, the subgroups showed a similar level of improvement; and, there was no difference in recovery over time between the subgroups. At 24 months, the DLCO did not differ between the subgroups, with a mean DLCO of 73% for all patients. At 24 months, 65% of patients still had a DLCO < 80%, and in 40% of patients DLCO was <70% of predicted. Regardless the initial disease severity, all COVID-19 survivors showed improvement in DLCO during follow-up; however, DLCO had not normalised in the majority of patients with a DLCO <80% 3 months after hospital discharge.