Following Spring Training, Severino was named the Yankees fourth starter. On April 13, 2017, Severino struck out a career-high 11 batters in seven innings as the Yankees won 3–2 over the Tampa Bay Rays. In his following start, Severino struck out 10 batters in a career-high eight innings in a 4–1 loss to the Chicago White Sox. On April 26, Severino pitched seven shutout innings against the Boston Red Sox. On May 24, Severino pitched eight shutout innings against the Kansas City Royals. As of June 10, he had a 5–2 record with a 2.75 ERA. In a no-decision, he struck out a career-high 12 batters in seven innings against the White Sox on June 27 as the bullpen blew a lead for the sixth time in Severino's starts. Despite his strong start, Severino struggled to end the first half, allowing 16 earned runs in four starts from June 15 to July 2, for a 7.03 ERA in that span. He finished his first half on a high note though, striking out 10 batters over seven innings of three-run ball against the Milwaukee Brewers on July 8, his fourth start of the season with at least 10 strikeouts. Severino was named to the American League All-Star team alongside his teammates Aaron Judge, Gary Sanchez, Starlin Castro and Dellin Betances. In the first half of the season, he had posted a 5–4 record with a 3.54 ERA and 124 strikeouts in 106⅓ innings. His 10.50 strikeout per-9 ratio ranked in the top five of the American League.
Severino started the second half strong, first matching Chris Sale by allowing one run over seven innings in a pitcher's duel against the Red Sox. In his next start, he fired seven shutout innings against the Seattle Mariners and then allowed zero earned runs in seven innings against the Cincinnati Reds. As of July 27, Severino was tied with Max Scherzer for second-most starts (8) of at least seven innings pitched with one earned run or less in the 2017 season, behind Clayton Kershaw's 11. On August 17, 2017, Severino collected his first Major League hit off Steven Matz against the New York Mets. He collected his 11th win holding the Detroit Tigers to one earned run over 6⅔ innings with eight strikeouts on August 23. On September 3, against the Boston Red Sox, Severino struck out his 200th batter of the season, becoming the second-youngest Yankee in franchise history with 200 strikeouts in one season behind Al Downing in 1964. In the second half of the season, he went 9–2 with a 2.28 ERA in 14 starts, allowing no more than one earned run in ten of those starts.
With a three-quarters delivery, Severino currently throws three pitches: a four-seam fastball averaging 96 mph, a slider, and a change-up. His fastball was clocked at 101 mph in 2017. His average spin rate for sliders was ranked no. 2 in the MLB (2910 rpm) behind Garrett Richards (2919 rpm) in 2018.