To characterize the epidemiological properties of the B.1.526 SARS-CoV-2 (severe acute respiratory syndrome coronavirus 2) variant of interest, here we used nine epidemiological and population datasets and model-inference methods to reconstruct SARS-CoV-2 transmission dynamics in New York City, where B.1.526 emerged. We estimated that B.1.526 had a moderate increase (15 to 25%) in transmissibility, could escape immunity in 0 to 10% of previously infected individuals, and substantially increased the infection fatality risk (IFR) among adults 65 or older by >60% during November 2020 to April 2021, compared to estimates for preexisting variants. Overall, findings suggest that new variants like B.1.526 likely spread in the population weeks before detection and that partial immune escape (e.g., resistance to therapeutic antibodies) could offset prior medical advances and increase IFR. Early preparedness for and close monitoring of SARS-CoV-2 variants, their epidemiological characteristics, and disease severity are thus crucial to COVID-19 (coronavirus disease 2019) response.