H9N2 avian influenza viruses are characterized by significant genetic diversity. Deletions within the hemagglutinin (HA) receptor-binding domain represent a notable, albeit rare, evolutionary trajectory. Here, we systematically characterized the multifaceted impact of a single-amino-acid deletion at residue 227 of HA (designated HAΔ227), a naturally occurring deletion within the 220-loop that overlaps a key antigenic epitope, using isogenic reverse genetics H9N2 viruses. Paradoxically, the HAΔ227 imposed a fitness cost and was associated with enhanced HA receptor-binding avidity, reduced apparent virion-associated NA activity, altered HA/NA functional balance, attenuated viral replication in vitro, and reduced respiratory shedding in vivo. Notably, despite this compromised replicative fitness, infection with the mutant virus was associated with an altered host immune response in chickens, characterized by elevated levels of interferon-γ (IFN-γ), interleukin-10 (IL-10), interleukin-1β (IL-1β), and monocyte chemoattractant protein-1 (MCP-1). These altered immune responses were associated with more severe pulmonary lesions, indicating a dissociation between disease severity and viral RNA load. Furthermore, the deletion increased the pH threshold for HA-mediated membrane fusion and substantially altered antigenic relationships. Collectively, our findings identify HA residue 227 as a functionally important site at which a single-residue deletion is associated with a phenotypic trade-off between replicative capacity and disease severity: reduced replicative fitness accompanied by altered inflammatory responses and greater tissue injury. This study highlights the potential phenotypic significance of a rare deletion in influenza virus HA and demonstrates that viral burden alone may not adequately predict disease severity.