Identification of small-molecule targets remains an important challenge for chemical genetics. We report an approach for target identification and protein discovery based on functional suppression of chemical inhibition in vitro. We discovered pirl1, an inhibitor of actin assembly, in a screen conducted with cytoplasmic extracts. Pirl1 was used to partially inhibit actin assembly in the same assay, and concentrated biochemical fractions of cytoplasmic extracts were added to find activities that suppressed pirl1 inhibition. Two activities were detected, separately purified, and identified as Arp2/3 complex and Cdc42/RhoGDI complex, both known regulators of actin assembly. We show that pirl1 directly inhibits activation of Cdc42/RhoGDI, but that Arp2/3 complex represents a downstream suppressor. This work introduces a general method for using low-micromolar chemical inhibitors to identify both inhibitor targets and other components of a signaling pathway.