The Werner syndrome RecQ helicase WRN was identified as a synthetic lethal target in cancer cells with microsatellite instability (MSI) by several genetic screens1–6. Despite advances in treatment with immune checkpoint inhibitors7–10, there is an unmet need in the treatment of MSI cancers11–14. Here we report the structural, biochemical, cellular and pharmacological characterization of the clinical-stage WRN helicase inhibitor HRO761, which was identified through an innovative hit-finding and lead-optimization strategy. HRO761 is a potent, selective, allosteric WRN inhibitor that binds at the interface of the D1 and D2 helicase domains, locking WRN in an inactive conformation. Pharmacological inhibition by HRO761 recapitulated the phenotype observed by WRN genetic suppression, leading to DNA damage and inhibition of tumour cell growth selectively in MSI cells in a p53-independent manner. Moreover, HRO761 led to WRN degradation in MSI cells but not in microsatellite-s