A strategy for pandemic preparedness is the development of antivirals against a wide set of viral targets with complementary mechanisms of action. SARS-CoV-2 nsp3-mac1 is a viral macrodomain with ADP-ribosylhydrolase activity, which counteracts host immune response. Targeting the virus' immunomodulatory functionality offers a differentiated strategy to inhibit SARS-CoV-2 compared to approved therapeutics, which target viral replication directly. Here we report a fragment-based lead generation campaign guided by computational approaches. We discover tool compounds which inhibit nsp3-mac1 activity at low nanomolar concentrations, and with responsive structure-activity relationships, high selectivity, and drug-like properties. Using our inhibitors, we show that inhibition of nsp3-mac1 increases ADP-ribosylation, but surprisingly does not translate to demonstrable antiviral activity in cell culture and iPSC-derived pneumocyte models. Further, no synergistic activity is observed in combination with interferon gamma, a main protease inhibitor, nor a papain-like protease inhibitor. Our results question the extent to which targeting modulation of innate immunity-driven ADP-ribosylation can influence SARS-CoV-2 replication. Moreover, these findings suggest that nsp3-mac1 might not be a suitable target for antiviral therapeutics development.