We report herein the discovery and optimization of 3-amino-1,5-dihydro-4H-pyrazolopyridin-4-one TYK2 inhibitors. High-throughput screening against TYK2 and JAK1-3 provided aminoindazole derivative 1 as a hit compound. Scaffold hopping of the aminoindazole core led to the discovery of 3-amino-1,5-dihydro-4H-pyrazolopyridin-4-one derivative 3 as a novel chemotype of TYK2 inhibitors. Interestingly, initial SAR study suggested that this scaffold could have a vertically flipped binding mode, which prompted us to introduce a substituent at the 7-position as a moiety directed toward the solvent-exposed region. Introduction of a 1-methyl-3-pyrazolyl moiety at the 7-position resulted in a dramatic increase in TYK2 inhibitory activity, and further optimization led to the discovery of 20. Compound 20 inhibited IL-23-induced IL-22 production in a rat PD assay, as well as inhibited IL-23 signaling in human PBMC. Furthermore, 20 showed selectivity for IL-23 signaling inhibition against GM-CSF, demonstrating the unique cytokine selectivity of the novel TYK2 inhibitor.