The papain-like protease (PLpro) of SARS-CoV-2 is a validated antiviral drug target. Through a fluorescence resonance energy transfer-based high-throughput screening and subsequent lead optimization, we identified several PLpro inhibitors including Jun9-72-2 and Jun9-75-4 with improved enzymatic inhibition and antiviral activity compared to GRL0617, which was reported as a SARS-CoV PLpro inhibitor. Significantly, we developed a cell-based FlipGFP assay that can be applied to predict the cellular antiviral activity of PLpro inhibitors in the BSL-2 setting. X-ray crystal structure of PLpro in complex with GRL0617 showed that binding of GRL0617 to SARS-CoV-2 induced a conformational change in the BL2 loop to a more closed conformation. Molecular dynamics simulations showed that Jun9-72-2 and Jun9-75-4 engaged in more extensive interactions than GRL0617. Overall, the PLpro inhibitors identified in this study represent promising candidates for further development as SARS-CoV-2 antivirals, and the FlipGFP-PLpro assay is a suitable surrogate for screening PLpro inhibitors in the BSL-2 setting.