Tankyrases constitute potential drug targets for cancer and myelin-degrading diseases. We have applied a structure- and biophysics-driven fragment-based ligand design strategy to discover a novel family of potent inhibitors for human tankyrases. Biophysical screening based on a thermal shift assay identified highly efficient fragments binding in the nicotinamide-binding site, a local hot spot for fragment binding. Evolution of the fragment hit 4-methyl-1,2-dihydroquinolin-2-one (2) along its 7-vector yields dramatic affinity improvements in the first cycle of expansion. A crystal structure of 7-(2-fluorophenyl)-4-methylquinolin-2(1H)-one (11) reveals that the nonplanar compound extends with its fluorine atom into a pocket, which coincides with a region of the active site where structural differences are seen between tankyrases and other poly(ADP-ribose) polymerase (PARP) family members. A further cycle of optimization yielded compounds with affinities and IC50 values in the low nanomolar range and with good solubility, PARP selectivity, and ligand efficiency.