Polycomb repressive complex 1 (PRC1) is critical for mediating gene expression during development. Five chromobox (CBX) homolog proteins, CBX2, CBX4, CBX6, CBX7, and CBX8, are incorporated into PRC1 complexes, where they mediate targeting to trimethylated lysine 27 of histone H3 (H3K27me3) via the N-terminal chromodomain (ChD). Individual CBX paralogs have been implicated as drug targets in cancer; however, high similarities in sequence and structure among the CBX ChDs provide a major obstacle in developing selective CBX ChD inhibitors. Here we report the selection of small, focused, DNA-encoded libraries (DELs) against multiple homologous ChDs to identify modifications to a parental ligand that confer both selectivity and potency for the ChD of CBX8. This on-DNA, medicinal chemistry approach enabled the development of SW2_110A, a selective, cell-permeable inhibitor of the CBX8 ChD. SW2_110A binds CBX8 ChD with a Kd of 800 nM, with minimal 5-fold selectivity for CBX8 ChD over all other CBX paralogs in vitro. SW2_110A specifically inhibits the association of CBX8 with chromatin in cells and inhibits the proliferation of THP1 leukemia cells driven by the MLL-AF9 translocation. In THP1 cells, SW2_110A treatment results in a significant decrease in the expression of MLL-AF9 target genes, including HOXA9, validating the previously established role for CBX8 in MLL-AF9 transcriptional activation, and defining the ChD as necessary for this function. The success of SW2_110A provides great promise for the development of highly selective and cell-permeable probes for the full CBX family. In addition, the approach taken provides a proof-of-principle demonstration of how DELs can be used iteratively for optimization of both ligand potency and selectivity.