Soon after the declaration of the COVID-19 pandemic, the Institute for Health Sciences Research (IICS) of the National University of Asunción, Paraguay became a testing laboratory (COVID-Lab) for SARS-CoV-2. The COVID-Lab testing performance was assessed from 1 April 2020 to 12 May 2021. The effect of the pandemic on the IICS and how the COVID-Lab contributed to the academic and research activities of the institute were also assessed. IICS researchers and staff adjusted their work schedules to support the COVID-Lab. Of the 13,082 nasopharyngeal/oropharyngeal swabs processed, 2704 (20.7%) tested positive for SARS-CoV-2 by RT-PCR. Of the individuals testing positive, 55.4% were female and 48.3% were aged 21–40 years. Challenges faced by the COVID-Lab were unstable reagent access and insufficient staff; shifting obligations regarding research, academic instruction, and grantsmanship; and the continuous demands from the public for information on COVID-19. The IICS provided essential testing and reported on the progress of the pandemic. IICS researchers gained better laboratory equipment and expertise in molecular SARS-CoV-2 testing but struggled to manage their conflicting educational and additional research obligations during the pandemic, which affected their productivity. Therefore, policies protecting the time and resources of the faculty and staff engaged in pandemic-related work or research are necessary components of healthcare emergency preparedness.