Identifying the protein targets of bioactive small molecules remains a major problem in the discovery of new chemical probes and therapeutics. While activity based probes and photo-cross-linkers have had success in identifying protein targets of small molecules, each technique has limitations. Here we describe a method for direct proximity tagging of proteins that bind small molecules. We engineered a promiscuous ligase based on the NEDD8 conjugating enzyme, Ubc12, which can be covalently linked to a small molecule of interest. When target proteins bind the small molecule, they are directly labeled on surface lysines with a biotinylated derivative of the small ubiquitin homologue, NEDD8. This unique covalent tag can then be used to identify the small molecule binding proteins. Utilizing the drug dasatinib, we have shown that dasatinib-directed NEDDylation occurs for known endogenous protein binders in complex cell lysates. In addition, we have been able to improve NEDDylation efficiency through rational mutagenesis. Finally, we have shown that affinity-directed NEDDylation can be applied to two other protein ligand interactions beyond kinases. Proximity tagging using this engineered ligase requires direct binding of the target and, thus, provides a useful and orthogonal approach to facilitate small molecule target identification.