Src Homology 2-containing Inositol 5'-Phosphatase-1 (SHIP-1), encoded by INPP5D, has been identified as an Alzheimer's disease (AD) risk-associated gene through recent genetic and epigenetic studies. SHIP-1 confers AD risk by inhibiting the TREM2 cascade and reducing beneficial microglial cellular processes, including phagocytosis. While several small molecules have been reported to modulate SHIP-1 activity, their limited selectivity and efficacy in advanced models restricted their potential as therapeutic agents or probes for biological studies. Herein, we validated and implemented a high-throughput screening platform to explore new chemotypes that can modulate the phosphatase activity of SHIP-1. We screened 49,260 central nervous system (CNS)-penetrate compounds sourced from commercial vendors using the malachite green-based assay for anti-SHIP-1 activity. Through analysis, prioritization, and validation of the screening hits, we identified three novel types of scaffolds that inhibit the SHIP-1 phosphatase activity with IC50s as low as 46.6 µM. To improve the inhibitory activity of these promising hits, we carried out structure-activity relationship (SAR) studies, resulting in a lead molecule SP3-12 that inhibits SHIP-1 with an IC50 value of 6.1 μM. Kinetic analyses of SP3-12 revealed that its inhibition mechanism is competitive, with a Ki value of 3.2 µM for SHIP-1 and a 7-fold selectivity over SHIP-2. Furthermore, results from testing in a microglial phagocytosis/cell health high content assay indicated that SP3-12 could effectively activate phagocytosis in human microglial clone 3 (HMC3) cells, with an EC50 of 2.0 µM, without cytotoxicity in the dose range. Given its potency, selectivity, and cellular activity, SP3-12 emerges as a promising small molecule inhibitor with potential for investigating the biological functions of SHIP-1.