COVID-19 is a disease caused by SARS-CoV-2, which has led to more than 4 million deaths worldwide. As a result, there is a worldwide effort to develop specific drugs for targeting COVID-19. Papain-like protease (PLpro) is an attractive drug target because it has multiple essential functions involved in processing viral proteins, including viral genome replication and removal of post-translational ubiquitination modifications. Here, we established two assays for screening PLpro inhibitors according to protease and anti-ISGylation activities, respectively. Application of the two screening techniques to the library of clinically approved drugs led to the discovery of tanshinone IIA sulfonate sodium and chloroxine with their IC50 values of lower than 10 μM. These two compounds were found to directly interact with PLpro and their molecular mechanisms of binding were illustrated by docking and molecular dynamics simulations. The results highlight the usefulness of the two developed screening techniques for locating PLpro inhibitors.