Anticipating and addressing resistance is essential for maximizing the potential of an oncology target and effectively addressing clinical needs. In this study, we aimed to proactively outline the resistance mechanisms of USP7 inhibitors. We discovered a key treatment-emergent heterozygous mutation (V517F) in USP7 in the binding pocket of compounds as the primary cause of resistance to the USP7 inhibitor USP7-797. Our structural analysis, supported by AlphaFold2 predictions, indicates that the V517F mutation altered the conformation of the compound binding pocket, causing steric hindrance and reducing the affinity between USP7 and its inhibitors. Consistent with these predictions, the affinity between V517F mutant and USP7 inhibitors was found to reduce significantly. Conversely, substitutions at position V517 with smaller side chains, such as V517G, V517A, and V517I, do not significantly impact binding affinity. In contrast, replacement with the bulkier side chain V517Y leads to reduced binding affinity and diminished inhibitor efficacy. Furthermore, the engineered cell lines harboring the V517F mutation exhibited substantial resistance to USP7 inhibition. These data provide rationales for patient selection and the development of next-generation USP7 inhibitors designed to overcome treatment-emergent mutations.