SARS-CoV-2 has caused the global COVID-19 pandemic. Although passively delivered neutralizing antibodies against SARS-CoV-2 show promise in clinical trials, their mechanism of action in vivo is incompletely understood. Here, we define correlates of protection of neutralizing human monoclonal antibodies (mAbs) in SARS-CoV-2-infected animals. Whereas Fc effector functions are dispensable when representative neutralizing mAbs are administered as prophylaxis, they are required for optimal protection as therapy. When given after infection, intact mAbs reduce SARS-CoV-2 burden and lung disease in mice and hamsters better than loss-of-function Fc variant mAbs. Fc engagement of neutralizing antibodies mitigates inflammation and improves respiratory mechanics, and transcriptional profiling suggests these phenotypes are associated with diminished innate immune signaling and preserved tissue repair. Immune cell depletions establish that neutralizing mAbs require monocytes for therapeutic efficacy. Thus, potently neutralizing mAbs require Fc effector functions for maximal therapeutic benefit during therapy to modulate protective immune responses and mitigate lung disease.