Herein, we report the discovery of a series of JAK1-selective kinase inhibitors with high potency and excellent JAK family subtype selectivity. A fragment screening hit 1 with a pyrazolopyridone core and a JAK1 bias was selected as the starting point for our fragment-based lead generation efforts. A two-stage strategy was chosen with the dual aims of improving potency and JAK1 selectivity: Optimization of the lipophilic ribose pocket-targeting substituent was followed by the introduction of a variety of P-loop-targeting functional groups. Combining the best moieties from both stages of the optimization afforded compound 40, which showed excellent potency and selectivity. Metabolism studies in vitro and in vivo together with an in vitro safety evaluation suggest that 40 may be a viable lead compound for the development of highly subtype-selective JAK1 inhibitors.