Rhomboids are relatively recently discovered intramembrane serine proteases that are conserved throughout evolution. They have a wide range of biological functions, and there is also much speculation about their potential medical relevance. Although rhomboids are weakly inhibited by some broad-spectrum serine protease inhibitors, no potent and specific inhibitors have been identified for these enzymes, which are mechanistically distinct from and evolutionarily unrelated to the classical soluble serine proteases. Here we report a new biochemical assay for rhomboid function based on the use of quenched fluorescent substrate peptides. We have developed this assay into a high-throughput format and have undertaken an inhibitor and activator screen of approximately 58,000 small molecules. This has led to the identification of a new class of rhomboid inhibitors, a series of monocyclic β-lactams, which are more potent than any previous inhibitor. They show selectivity, both for rhomboids over the soluble serine protease chymotrypsin and also, importantly, between different rhomboids; they can inhibit mammalian as well as bacterial rhomboids; and they are effective both in vitro and in vivo. These compounds represent important templates for further inhibitor development, which could have an impact both on biological understanding of rhomboid function and potential future drug development.