Acute Respiratory Distress Syndrome (ARDS) severity may be influenced by heterogeneity of neutrophil activation. Interferon-stimulated genes (ISG) are a broad gene family induced by Type I interferons, often as a response to viral infections, which evokes extensive immunomodulation. We tested the hypothesis that over- or under-expression of immunomodulatory ISG by neutrophils is associated with worse clinical outcomes in patients with ARDS. Genome-wide transcriptional profiles of circulating neutrophils isolated from patients with sepsis-induced ARDS (n = 31) and healthy controls (n = 19) were used to characterize ISG expression. Hierarchical clustering of expression identified 3 distinct subject groups with Low, Mid and High ISG expression. ISG accounting for the greatest variability in expression were identified (MX1, IFIT1, and ISG15) and used to analyze a prospective cohort at the Colorado ARDS Network site. One hundred twenty ARDS patients from four urban hospitals were enrolled within 72 hours of initiation of mechanical ventilation. Circulating neutrophils were isolated from patients and expression of ISG determined by PCR. Samples were stratified by standard deviation from the mean into High (n = 21), Mid, (n = 82) or Low (n = 17) ISG expression. Clinical outcomes were compared between patients with High or Low ISG expression to those with Mid-range expression. At enrollment, there were no differences in age, gender, co-existing medical conditions, or type of physiologic injury between cohorts. After adjusting for age, race, gender and BMI, patients with either High or Low ISG expression had significantly worse clinical outcomes than those in the Mid for number of 28-day ventilator- and ICU-free days (P = 0.0006 and 0.0004), as well as 90-day mortality and 90-day home with unassisted breathing (P = 0.02 and 0.004). These findings suggest extremes of ISG expression by circulating neutrophils from ARDS patients recovered early in the syndrome are associated with poorer clinical outcomes.