Pediatric COVID-19 following SARS-CoV-2 infection is associated with fewer hospitalizations and often milder disease than in adults. A subset of children, however, present with Multisystem Inflammatory Syndrome in Children (MIS-C) that can lead to vascular complications and shock, but rarely death. The immune features of MIS-C compared to pediatric COVID-19 or adult disease remain poorly understood. We analyzed peripheral blood immune responses in hospitalized SARS-CoV-2 infected pediatric patients (pediatric COVID-19) and patients with MIS-C. MIS-C patients had patterns of T cell-biased lymphopenia and T cell activation similar to severely ill adults, and all patients with MIS-C had SARS-CoV-2 spike-specific antibodies at admission. A distinct feature of MIS-C patients was robust activation of vascular patrolling CX3CR1+ CD8+ T cells that correlated with the use of vasoactive medication. Finally, whereas pediatric COVID-19 patients with acute respiratory distress syndrome (ARDS) had sustained immune activation, MIS-C patients displayed clinical improvement over time, concomitant with decreasing immune activation. Thus, non-MIS-C versus MIS-C SARS-CoV-2 associated illnesses are characterized by divergent immune signatures that are temporally distinct from one another and implicate CD8+ T cells in the clinical presentation and trajectory of MIS-C.