Early stages of deadly respiratory diseases including COVID-19 are challenging to elucidate in humans. Here, we define cellular tropism and transcriptomic effects of SARS-CoV-2 virus by productively infecting healthy human lung tissue and using scRNA-seq to reconstruct the transcriptional program in “infection pseudotime” for individual lung cell types. SARS-CoV-2 predominantly infected activated interstitial macrophages (IMs), which can accumulate thousands of viral RNA molecules, taking over 60% of the cell transcriptome and forming dense viral RNA bodies while inducing host profibrotic (TGFB1, SPP1) and inflammatory (early interferon response, CCL2/7/8/13, CXCL10, and IL6/10) programs and destroying host cell architecture. Infected alveolar macrophages (AMs) showed none of these extreme responses. Spike-dependent viral entry into AMs used ACE2 and Sialoadhesin/CD169, whereas IM entry used DC-SIGN/CD209. These results identify activated IMs as a prominent site of viral takeover, the focus of inflammation and fibrosis, and suggest targeting CD209 to prevent early pathology in COVID-19 pneumonia. This approach can be generalized to any human lung infection and to evaluate therapeutics.