Background: In the context of the COVID-19 pandemic, understanding the influence of pre-existing Interstitial Lung Disease (ILD) on patient outcomes is crucial. This study aimed to compare the impact of COVID-19 on patients with Idiopathic Interstitial Pneumonia (IIP) versus Connective Tissue Disease-related ILD (CTD-ILD) in terms of mortality, length of hospital stay (LOS) and Intensive Care Unit (ICU) admission. Methods: The National Inpatient Sample (NIS) database for 2019-2020 identified adult patients hospitalized with COVID-19 and either IP or CTD-ILD. Patient demographics, comorbidities, and outcomes were analyzed. Results: Among 1,010,030 COVID-19 hospitalizations, 11,030 had ILD, with 1,105 associated with CTD. Although both IL and CTD-ILD groups had higher mortality rates than non-ILD patients, there was no significant difference in mortality between CTD-ILD and ILI groups. The odds ratio for mortality was 0.78 (95% CI 0.50-1.2, p = 0.3) for CTD-ILD compared to ILP patients and 1.54 (95% CI 1.03-2.31, p = 0.03) for CTD-ILD compared to non-ILD patients. Conclusion: This study underscores the importance of considering ILD subtypes in predicting COVID-19 outcomes. Despite demographic and comorbidity differences, mortality rates were comparable between CTD-ILD and IIP patients. Further research is needed to explore underlying mechanisms contributing to mortality in different ILD subtypes and the impact of specific rheumatological diseases and treatments on COVID-19 outcomes.