Peripheral membrane proteins orchestrate many physiological and pathological processes, making regulation of their activities by small molecules highly desirable. However, they are often refractory to classical competitive inhibition. Here, we demonstrate that potent and selective inhibition of peripheral membrane proteins can be achieved by small molecules that target protein-membrane interactions by a noncompetitive mechanism. We show that the small molecule Bragsin inhibits BRAG2-mediated Arf GTPase activation in vitro in a manner that requires a membrane. In cells, Bragsin affects the trans-Golgi network in a BRAG2- and Arf-dependent manner. The crystal structure of the BRAG2-Bragsin complex and structure-activity relationship analysis reveal that Bragsin binds at the interface between the PH domain of BRAG2 and the lipid bilayer to render BRAG2 unable to activate lipidated Arf. Finally, Bragsin affects tumorsphere formation in breast cancer cell lines. Bragsin thus pioneers a novel class of drugs that function by altering protein-membrane interactions without disruption.