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Emergence of newer variants of SARS-CoV-2 underscores the need for effective antivirals to complement the vaccination program in managing COVID-19. The multi-functional papain-like protease (PLpro) of SARS-CoV-2 is an essential viral protein that not only regulates the viral replication but also modulates the host immune system, making it a promising therapeutic target. To this end, we developed an in vitro interferon stimulating gene 15 (ISG15)-based Förster resonance energy transfer (FRET) assay and screened the National Cancer Institute (NCI) Diversity Set VI compound library, which comprises 1584 small molecules. Subsequently, we assessed the PLpro enzymatic activity in the presence of screened molecules. We identified three potential PLpro inhibitors, namely, NSC338106, 651084, and 679525, with IC 50 values in the range from 3.3 to 6.0 µM. These molecules demonstrated in vitro inhibition of the enzyme activity and exhibited antiviral activity against SARS-CoV-2, with EC 50 values ranging from 0.4 to 4.6 µM. The molecular docking of all three small molecules to PLpro suggested their specificity towards the enzyme's active site. Overall, our study contributes promising prospects for further developing potential antivirals to combat SARS-CoV-2 infection.