Abstract SARS-CoV-2 papain-like protease (PLpro) covers multiple functions. Beside the cysteine-protease activity, facilitating cleavage of the viral polypeptide chain, PLpro has the additional and vital function of removing ubiquitin and ISG15 (Interferon-stimulated gene 15) from host-cell proteins to support coronaviruses in evading the host’s innate immune responses. We identified three phenolic compounds bound to PLpro, preventing essential molecular interactions to ISG15 by screening a natural compound library. The compounds identified by X-ray screening and complexed to PLpro demonstrate clear inhibition of PLpro in a deISGylation activity assay. Two compounds exhibit distinct antiviral activity in Vero cell line assays and one inhibited a cytopathic effect in non-cytotoxic concentration ranges. In the context of increasing PLpro mutations in the evolving new variants of SARS-CoV-2, the natural compounds we identified may also reinstate the antiviral immune response processes of the host that are down-regulated in COVID-19 infections.