Aberrant activation of the WNT/β-catenin signaling pathway is implicated in various types of cancers. Inhibitors targeting the Wnt signaling pathway are intensively studied in the current cancer research field, the outcomes of which remain to be determined. In this study, we have attempted to discover novel potent WNT/β-catenin pathway inhibitors through tankyrase 1/2 structure-based virtual screening. After screening more than 13.4 million compounds through molecular docking, we experimentally verified one compound, LZZ-02, as the most potent inhibitor out of 11 structurally representative top hits. LiCl-induced HEK293 cells containing TOPFlash reporter showed that LZZ-02 inhibited the transcriptional activity of β-catenin with an IC50 of 10 ± 1.2 μM. Mechanistically, LZZ-02 degrades the expression of β-catenin by stabilizing axin 2, thereby diminishing downstream proteins levels, including c-Myc and cyclin D1. LZZ-02 also inhibits the growth of colonic carcinoma cell harboring constitutively active β-catenin. More importantly, LZZ-02 effectively shrinks tumor xenograft derived from colonic cell lines. Our study successfully identified a novel tankyrase 1/2 inhibitor and shed light on a novel strategy for developing inhibitors targeting the WNT/β-catenin signaling axis.