Emerging variants of SARS-CoV-2 still threaten the effectiveness of currently deployed vaccines, and antivirals can prove to be an effective therapeutic option for attenuating it. The papain-like protease (PLpro) is an attractive target due to its sequence conservation and critical role in the replication and pathogenesis of SARS-CoV-2. PLpro also plays very important role in modulation of host immune responses by deubiquitinating (DUBs) or deISGylating host proteins. Thus, targeting PLpro serves as a two-pronged approach to abate SARS-CoV-2. Due to its structural and functional similarities with the host DUB enzymes, an in-house library of DUB inhibitors was constituted in this study. Five promising compounds exhibiting high binding affinities with the substrate binding site of PLpro were identified from a library of 81 compounds with in silico screening, docking, and simulation studies. Interestingly, lithocholic acid, linagliptin, teneligliptin, and flupenthixol significantly inhibited the proteolytic activity of PLpro. Each of these compounds abrogated in vitro replication of SARS-CoV-2 with EC50 values in the range of 5-21 micro M. In addition, crystal structure of SARS-CoV-2 PLpro and its complex with inhibitors have been determined that revealed their inhibitory mechanism. The findings of this study provide the proof-of-principle that the DUB inhibitors hold high potential as a new class of therapeutics against SARS-CoV-2. Additionally, this is the first study that has opened a new avenue towards not only targeting PLpro active site but also simultaneously directing towards restoration of antiviral immune response of the host for deterring SARS-CoV-2.