Janus kinases (JAKs) are central components in cytokine signaling pathways. A number of small molecule JAK inhibitors have been approved to treat a wide range of inflammatory and autoimmune diseases. Due to safety concerns of pan-JAK inhibition, the thrust of current research is toward the discovery of isoform-selective JAK inhibitors. Selective inhibition of tyrosine kinase 2 (TYK2) has the potential to balance efficacy and safety. Substantial efforts have been made to develop selective TYK2 inhibitors: Deucravacitinib (BMS-986165) is a representative allosteric inhibitor that has been approved by the FDA, and ropsacitinib (PF-06826647) is an active site-directed inhibitor currently being evaluated in clinical trials. Herein, we outline the key roles of TYK2 in diseases, review the advances of selective TYK2 inhibitors, and finally discuss future perspectives and challenges in the development of TYK2 inhibitors.