Ubiquitin-like protein ISG15 (interferon-stimulated gene 15) (ISG15) is a ubiquitin-like modifier induced during infections and involved in host defense mechanisms. Not surprisingly, many viruses encode deISGylating activities to antagonize its effect. Here we show that infection by Zika, SARS-CoV-2 and influenza viruses induce ISG15-modifying enzymes. While influenza and Zika viruses induce ISGylation, SARS-CoV-2 triggers deISGylation instead to generate free ISG15. The ratio of free versus conjugated ISG15 driven by the papain-like protease (PLpro) enzyme of SARS-CoV-2 correlates with macrophage polarization toward a pro-inflammatory phenotype and attenuated antigen presentation. In vitro characterization of purified wild-type and mutant PLpro revealed its strong deISGylating over deubiquitylating activity. Quantitative proteomic analyses of PLpro substrates and secretome from SARS-CoV-2-infected macrophages revealed several glycolytic enzymes previously implicated in the expression of inflammatory genes and pro-inflammatory cytokines, respectively. Collectively, our results indicate that altered free versus conjugated ISG15 dysregulates macrophage responses and probably contributes to the cytokine storms triggered by SARS-CoV-2.