Src homology 2 (SH2) domains recognize phosphotyrosine-containing sequences, and thereby mediate the association of specific signaling proteins in response to tyrosine phosphorylation (Pawson, T., and Schlessinger, J. (1993) Curr. Biol. 3, 434-442). We have shown that specific binding of SH2 domains to tyrosine-phosphorylated sites is determined by sequences adjacent to the phosphotyrosine. Eased on the phosphopeptide specific ity and crystal structures, SH2 domains were classified into four different groups (Songyang, Z., Shoelson, S. E., Chaudhuri, M., Gish, G., Pawson, T., Haser, W. G., King, F., Roberts, T., Ratnofsky, S., Lechleider, R. J., Neel, E. G., R. E. E., Fajardo, J. E., Chou, M. M., Hanafusa, H., Schaffhausen, E., and Cantley, L. C. (1993) Cell 72, 767-778). The beta D5 residues of SH2 domains were predicted to be critical in distinguishing these groups (Songyang, Z., Shoelson, S. E., Chaudhuri, M., Gish, G., Pawson, T., I-laser, W. G., King, F., Roberts, T., Ratnofsky, S., Lechleider, R. J., Neel, E. G., R. E. E., Fajardo, J. E., Chou, M. Ri., Hanafusa, H., Schaffhausen, E., and Cantley, L. C. (1993) Cell 72, 767-778; Eck, M. J., Shoelson, S. E., and Harrison, S. C. (1993) Nature 362, 87-91). We report here that replacing the aliphatic residues at the beta D5 positions of two Group III SH2 domains (phosphoinositide 3-kinase N-terminal SH2 domain and phospholipase C-gamma C-terminal SH2 domain) with Tyr (as found in Group I SH2 domains) results in a switch in phosphopeptide selectivity, consistent with the specificities of Group I SH2 domains. These results establish the importance of the beta D5 residue in determining specificities of SH2 domains.