Transglutaminase 2 (TG2) catalyzes site-specific deamidation of glutamine residues in gluten-derived peptides, enhancing their affinity for HLA-DQ2 or HLA-DQ8, playing a central role in the celiac disease (CeD) pathobiology. TG2 activity is upregulated in CeD animal models and likely in human CeD patients as well; however, the precise location and abundance of pathogenic TG2 activity within the celiac small intestine remain unclear. We propose that TG2 localized near the surface of specific dendritic cells is the principal source of this pathogenic activity. To test this hypothesis while empirically identifying a maximum effective dose of a therapeutic TG2 inhibitor, we engineered HB-2121, a pentapeptide that selectively blocks TG2 while simultaneously appending a sulfo-Cy5 fluorescent probe in its active site to enable histological detection of TG2 activity in intestinal mucosa. In vitro and in vivo nonclinical studies demonstrated that HB-2121 is an orally active, gut-restricted TG2 inhibitor that potently blocks gluten toxicity in an HLA-DQ2-dependent CeD mouse model. Extensive nonclinical studies in rodents and dogs confirmed that HB-2121 is well tolerated, minimally metabolized by intestinal enzymes, and rapidly cleared via hepatic metabolism following systemic absorption. Building on these findings, we undertook a Phase 1a clinical study assessing the safety and tolerability of HB-2121 at Stanford University, USA (NCT07063823). Single oral doses as high as 250 mg produced no drug-related serious adverse events. Pharmacokinetic and metabolic analyses of patient-derived samples confirmed the gut-restricted profile of HB-2121 observed preclinically. These results led to the initiation of a Phase 1b study (NCT07377565), in which HB-2121 is dosed to subjects with suspected CeD alongside standard-of-care esophagogastroduodenoscopy and small bowel biopsy. The objectives of our ongoing studies are to visualize HB-2121 engagement with catalytically active TG2 in the small intestine and to identify differences in its distribution between CeD subjects and control individuals.