The p21-activated kinases (PAKs) are immediate downstream effectors of the Rac/Cdc42 small G-proteins and implicated in promoting tumorigenesis in various types of cancer including breast and lung carcinomas. Recent studies have established a requirement for the PAKs in the pathogenesis of Neurofibromatosis type 2 (NF2), a dominantly inherited cancer disorder caused by mutations at the NF2 gene locus. Merlin, the protein product of the NF2 gene, has been shown to negatively regulate signaling through the PAKs and the tumor suppressive functions of Merlin are mediated, at least in part, through inhibition of the PAKs. Knockdown of PAK1 and PAK2 expression, through RNAi-based approaches, impairs the proliferation of NF2-null schwannoma cells in culture and inhibits their ability to form tumors in vivo. These data implicate the PAKs as potential therapeutic targets. High-throughput screening of a library of small molecules combined with a structure-activity relationship approach resulted in the identification of FRAX597, a small-molecule pyridopyrimidinone, as a potent inhibitor of the group I PAKs. Crystallographic characterization of the FRAX597/PAK1 complex identifies a phenyl ring that traverses the gatekeeper residue and positions the thiazole in the back cavity of the ATP binding site, a site rarely targeted by kinase inhibitors. FRAX597 inhibits the proliferation of NF2-deficient schwannoma cells in culture and displayed potent anti-tumor activity in vivo, impairing schwannoma development in an orthotopic model of NF2. These studies identify a novel class of orally available ATP-competitive Group I PAK inhibitors with significant potential for the treatment of NF2 and other cancers.