As recently discovered, matriptase-2, a type II transmembrane serine protease, plays a crucial role in body iron homeostasis by down-regulating hepcidin expression, which results in increased iron levels. Thus, matriptase-2 represents a novel target for the development of enzyme inhibitors potentially useful for the treatment of systemic iron overload (hemochromatosis). A comparative three-dimensional model of the catalytic domain of matriptase-2 was generated and utilized for structure-based virtual screening in combination with similarity searching and knowledge-based compound design. Two N-protected dipeptide amides containing a 4-amidinobenzylamide as P1 residue (compounds 1 and 3) were identified as the first small molecule inhibitors of matriptase-2 with K_i values of 170 and 460 nM, respectively. An inhibitor of the closely related protease matriptase (compound 2, K_i = 220 nM), with more than 50-fold selectivity over matriptase-2, was also identified.