TYK2 is a key mediator of IL12, IL23, and type I interferon signaling, and these cytokines have been implicated in the pathogenesis of multiple inflammatory and autoimmune diseases such as psoriasis, rheumatoid arthritis, lupus, and inflammatory bowel diseases. Supported by compelling data from human genome-wide association studies and clinical results, TYK2 inhibition through small molecules is an attractive therapeutic strategy to treat these diseases. Herein, we report the discovery of a series of highly selective pseudokinase (Janus homology 2, JH2) domain inhibitors of TYK2 enzymatic activity. A computationally enabled design strategy, including the use of FEP+, was instrumental in identifying a pyrazolo-pyrimidine core. We highlight the utility of computational physics-based predictions used to optimize this series of molecules to identify the development candidate 30, a potent, exquisitely selective cellular TYK2 inhibitor that is currently in Phase 2 clinical trials for the treatment of psoriasis and psoriatic arthritis.