Background Activation of the TREM-1 pathway is associated with outcome in life threatening COVID-19. Data suggest that modulation of this pathway with nangibotide, a TREM-1 modulator may improve survival in TREM-1 activated patients (identified using the biomarker sTREM-1). Methods Phase 2 double-blind randomized controlled trial assessing efficacy, safety, and optimum treatment population of nangibotide (1.0 mg/kg/h) compared to placebo. Patients aged 18–75 years were eligible within 7 days of SARS-CoV-2 documentation and within 48 h of the onset of invasive or non-invasive respiratory support because of COVID-19-related ARDS. Patients were included from September 2020 to April 2022, with a pause in recruitment between January and August 2021. Primary outcome was the improvement in clinical status defined by a seven-point ordinal scale in the overall population with a planned sensitivity analysis in the subgroup of patients with a sTREM-1 level above the median value at baseline (high sTREM-1 group). Secondary endpoints included safety and all-cause 28-day and day 60 mortality. The study was registered in EudraCT (2020-001504-42) and ClinicalTrials.gov (NCT04429334 ). Findings The study was stopped after 220 patients had been recruited. Of them, 219 were included in the mITT analysis. Nangibotide therapy was associated with an improved clinical status at day 28. Fifty-two (52.0%) of patients had improved in the placebo group compared to 77 (64.7%) of the nangibotide treated population, an odds ratio (95% CI) for improvement of 1.79 (1.02–3.14), p = 0.043. In the high sTREM-1 population, 18 (32.7%) of placebo patients had improved by day 28 compared to 26 (48.1%) of treated patients, an odds ratio (95% CI) of 2.17 (0.96–4.90), p = 0.063 was observed. In the overall population, 28 (28.0%) of placebo treated patients were not alive at the day 28 visit compared to 19 (16.0%) of nangibotide treated patients, an absolute improvement (95% CI) in all-cause mortality at day 28, adjusted for baseline clinical status of 12.1% (1.18–23.05). In the high sTREM-1 population (n = 109), 23 (41.8%) of patients in the placebo group and 12 (22.2%) of patients in the nangibotide group were not alive at day 28, an adjusted absolute reduction in mortality of 19.9% (2.78–36.98). The rate of treatment emergent adverse events was similar in both placebo and nangibotide treated patients. Interpretation Whilst the study was stopped early due to low recruitment rate, the ESSENTIAL study demonstrated that TREM-1 modulation with nangibotide is safe in COVID-19, and results in a consistent pattern of improved clinical status and mortality compared to placebo. The relationship between sTREM-1 and both risk of death and treatment response merits further evaluation of nangibotide using precision medicine approaches in life threatening viral pneumonitis.