Abstract Background Multisystem Inflammatory Syndrome in Children (MIS-C) is a rare and severe complication of SARS-CoV-2 infection that is characterized by multi-organ involvement and substantial inflammation. The immunological responses in MIS-C are not fully known. Antibody-mediated viral clearance in which innate immune cells interact with antibodies via their Fc receptors to remove the virus is an important mechanism for reducing SARS-CoV-2 viral load. However, little is known about how antibody-mediated cellular responses in MIS-C compared to acute COVID-19 infection and direct testing of cellular function ex vivo to understand the aberrant immune response in MIS-C is limited. Therefore, we focused on the antibody-mediated cellular responses in MIS-C relative to children and adults that had acute COVID-19 infection with spectrum of symptoms. We hypothesized that cells that bind antibodies to help clear the virus are dysfunctional in MIS-C patients, preventing the virus from being fully cleared. Methods We collected samples from MIS-C children along with pediatric and adult subjects with a clinical spectrum of COVID-19 symptoms and uninfected controls. Through these controls, we can compare Fc-mediated antibody functions between ages and clinical symptoms. We utilized high dimension flow cytometry to assess phenotype and function of innate immune cells that bind to antibodies and sequencing to study Fc receptor genetic. This data was then correlated with matched clinical data. Results Monocytes in MIS-C were hyperfunctional for antibody-dependent cellular phagocytosis and production of proinflammatory cytokines. In contrast, natural killer (NK) cells in MIS-C were hypofunctional for antibody-dependent cellular cytotoxicity and cytokine production. To provide some preliminary insight into mechanism, we show multiple ways leading to decreased cytotoxicity for NK cells, including phenotypic exhaustion of NK cells, variants in CD16 (NK cell Fc receptor) genetics that reduce Fc binding to IgG, and cytokine-induced associations. Using a novel anti-CD16 novel bispecific reagent that we developed, we could rescue the hypofunctional antibody-mediated NK cell function in MIS-C to the same levels as control. Conclusion Together, our results reveal dysregulation in antibody-mediated responses that are unique to MIS-C and may contribute to the immune pathology of this disease. Specifically, we find that monocytes are hyperfunctional with NK cells are hypofunctional. In the case of the MIS-C antibody-mediated response, while it is likely that multiple pathogenetic mechanisms contribute to MIS-C, our data suggest an imbalance of the antibody-mediated cellular response as a mechanistic correlate of this rare, but life-threatening outcome of SARS-COV-2 in children. Our results highlight that targeted therapies to reduce viral burden and/or boost NK cells responses while decreasing cytokine levels may be effective in preventing MIS-C.