Many therapeutically important enzymes are present in multiple cellular compartments, where they can carry out markedly different functions; thus, there is a need for pharmacological strategies to selectively manipulate distinct pools of target enzymes. Insulin-degrading enzyme (IDE) is a thiol-sensitive zinc-metallopeptidase that hydrolyzes diverse peptide substrates in both the cytosol and the extracellular space, but current genetic and pharmacological approaches are incapable of selectively inhibiting the protease in specific subcellular compartments. Here, we describe the discovery, characterization, and kinetics-based optimization of potent benzoisothiazolone-based inhibitors that, by virtue of a unique quasi-irreversible mode of inhibition, exclusively inhibit extracellular IDE. The mechanism of inhibition involves nucleophilic attack by a specific active-site thiol of the enzyme on the inhibitors, which bear an isothiazolone ring that undergoes irreversible ring opening with the formation of a disulfide bond. Notably, binding of the inhibitors is reversible under reducing conditions, thus restricting inhibition to IDE present in the extracellular space. The identified inhibitors are highly potent (IC50(app) = 63 nM), nontoxic at concentrations up to 100 μM, and appear to preferentially target a specific cysteine residue within IDE. These novel inhibitors represent powerful new tools for clarifying the physiological and pathophysiological roles of this poorly understood protease, and their unusual mechanism of action should be applicable to other therapeutic targets.