SH2 domains mediate protein-protein interactions and are involved in a wide range of intracellular signaling events. SH2 domains are 100-amino acid stretches of protein that bind to other proteins containing phosphotyrosine residues. A current major research goal is formulation of the structural principles which govern peptide-binding specificity in SH2 domains. Several structures (both X-ray and NMR) of SH2 domains have now been determined. Short peptide fragments on the carboxyl-terminal side of the phosphotyrosine residue carry the sequence specific information for SH2 recognition. The bound peptides are held in an extended conformation. However, for the GRB2 SH2 domain, the peptide adopts a beta-turn as the motif for recognition [Rahuel, J., et al. (1996) Nat. Struct. Biol. 3, 586-589]. Our SAR data and molecular modeling studies suggest that many SH2 domains, such as the SH2 domains of Lck, Src, and p85, can interact with high affinity with short peptide sequences at least in two ways which are sequence-dependent. The peptide forms either an extended chain across the D-strand of SH2 domains with anchors at pY and pY+3 or, as in the case of GRB2 SH2, a beta-turn with anchors at pY and pY+2. Due to a bulky tryptophan in its EF1 loop, GRB2 SH2 cannot bind peptide conformations such as the extended chain and thus has a unique specificity.