Human transglutaminase 2 (TG2) is believed to play an important role in the pathogenesis of various human disorders including celiac sprue, certain neurological diseases, and some types of cancer. Selective inhibition of TG2 should therefore enable further investigation of its role in physiology and disease and may lead to effective clinical treatment. Recently we showed that certain 3-halo-4-,5-dihydroisoxazole containing compounds are selective inhibitors of human TG2 with promising pharmacological activities. Here, we present definitive evidence that this class of compounds targets the active site of human TG2. Structure-activity relationship studies have provided insights into the structural prerequisites for selectivity and have led to the discovery of an inhibitor with about 50-fold higher activity than a prototypical dihydroisoxazole inhibitor with good in vivo activity. A method for preparing enantiomerically enriched analogues was also developed. Our studies show that the 5-(S)-dihydroisoxazole is a markedly better inhibitor of human TG2 than its 5-(R) stereoisomer.