The recovery process of COVID-19 patients is unclear. Some recovered patients complain of continued shortness of breath. Vasculopathy has been reported in COVID-19, stressing the importance of probing microstructure and function of lungs at the alveolar-capillary interface. While CT detects structural abnormalities, little is known about the impact of disease on lung function. 129Xe MRI is a technique uniquely capable of assessing ventilation, microstructure and gas exchange. Using 129Xe MRI, we found COVID-19 patients have higher ventilation defects percentage (5.9% vs 3.7%), unchanged microstructure, longer gas-blood exchange time (43.5 ms vs 32.5 ms), and reduced RBC/TP (0.279 vs 0.330) compared with healthy subjects. These findings suggest regional ventilation and alveolar airspace dimensions are relatively normal around the time of discharge, while gas-blood exchange function is diminished. This study establishes the feasibility of localized lung function measurement in COVID-19 patients. Such readouts could be useful as a supplement to structural imaging. Copyright © 2020 The Authors, some rights reserved; exclusive licensee American Association for the Advancement of Science. No claim to original U.S. Government Works. Distributed under a Creative Commons Attribution NonCommercial License 4.0 (CC BY-NC).