Human dihydroorotate dehydrogenase (hDHODH) is an attractive therapeutic target for the treatment of rheumatoid arthritis, transplant rejection and other autoimmune diseases. Based on the X-ray structure of hDHODH in complex with lead compound 7, a series of benzylidenehydrazinyl-substituted thiazole derivatives as potent inhibitors of hDHODH were designed and synthesized, of which 19 and 30 were the most potent with IC50 values in the double-digit nanomolar range. Moreover, compound 19 displayed significant anti-arthritic effects and favorable pharmacokinetic profiles in vivo. Further X-ray structure and SAR analyses revealed that the potencies of the designed inhibitors were partly attributable to additional water-mediated hydrogen bond networks formed by an unexpected buried water between hDHODH and the 2-(2-methylenehydrazinyl)thiazole scaffold. This work not only elucidates promising scaffolds targeting hDHODH for the treatment of rheumatoid arthritis, but also demonstrates that the water-mediated hydrogen bond interaction is an important factor in molecular design and optimization.