Akt plays a major role in tumorigenesis and the development of specific Akt inhibitors as effective cancer therapeutics has been challenging. Here, we report the identification of a highly specific allosteric inhibitor of Akt through a FRET-based high-throughput screening, and characterization of its inhibitory mechanism. Out of 373,868 compounds screened, 4-phenylquinolin-2(1H)-one specifically decreased Akt phosphorylation at both T308 and S473, and inhibited Akt kinase activity (IC50 = 6 µM) and downstream signaling. 4-Phenylquinolin-2(1H)-one did not alter the activity of upstream kinases including PI3K, PDK1, and mTORC2 as well as closely related kinases that affect cell proliferation and survival such as SGK1, PKA, PKC, or ERK1/2. This compound inhibited the proliferation of cancer cells but displayed less toxicity compared to inhibitors of PI3K or mTOR. Kinase profiling efforts revealed that 4-phenylquinolin-2(1H)-one does not bind to the kinase active site of over 380 human kinases including Akt. However, 4-phenylquinolin-2(1H)-one interacted with the PH domain of Akt, apparently inducing a conformation that hinders S473 and T308 phosphorylation by mTORC2 and PDK1. In conclusion, we demonstrate that 4-phenylquinolin-2(1H)-one is an exquisitely selective Akt inhibitor with a distinctive molecular mechanism, and a promising lead compound for further optimization toward the development of novel cancer therapeutics.