Critical intracellular signals in normal and malignant cells are transmitted by the adaptor protein Grb2 by means of its Src homology 2 (SH2) domain, which binds to phosphotyrosyl (pTyr) residues generated by the activation of tyrosine kinases. To understand this important control point and to design inhibitors, previous investigations have focused on the molecular mechanisms by which the Grb2 SH2 domain selectively binds pTyr containing peptides. In the current study, we demonstrate that the Grb2 SH2 domain can also bind in a pTyr independent manner. Using phage display, an 11-amino acid cyclic peptide, G1, has been identified that binds to the Grb2 SH2 domain but not the src SH2 domain. Synthetic G1 peptide blocks Grb2 SH2 domain association (IC 50 10 -25 M) with a 9-amino acid pTyrcontaining peptide derived from the SHC protein (pTyr317). These data and amino acid substitution analysis indicate that G1 interacts in the phosphopeptide binding site. G1 peptide requires a YXN sequence similar to that found in natural pTyr-containing ligands, and phosphorylation of the tyrosine increases G1 inhibitory activity. G1 also requires an internal disulfide bond to maintain the active binding conformation. Since the G1 peptide does not contain pTyr, it defines a new type of SH2 domain binding motif that may advance the design of Grb2 antagonists.The binding characteristics of Src homology 2 (SH2) 1 domains determine their important role as regulators of intracellular signaling (1, 2). Signal flow requires a phosphotyrosyl (pTyr) residue in the target protein for binding by the SH2 domain (1, 3, 4). Interaction of SH2 domains with specific pTyr-containing proteins activates distinct signaling pathways. SH2 domains modulate the activities of c-src (5), alter the substrate specificity of c-abl proto-oncoproteins (6, 7), and transduce signals initiated at growth factor receptors (8) and cellular attachment systems (9). SH2 domains have been suggested as promising sites for therapeutic intervention (10). Consequently, there has been significant effort to understand the structural basis of SH2 domain binding to pTyr-containing targets (11-21).The Grb2 SH2 domain binds pTyr-containing motifs within several proteins including the adapter proteins SHC (22, 23), growth factor receptors such as members of the erbB family (23-27), morphology-determining proteins such as FAK (9), and cellular oncogenes such as 28). SH2 domain binding leads to activation of important downstream pathways by bringing the nucleotide exchange factor SOS1 to the membrane environment of p21 ras (29). Other pathways may be initiated through action of the Grb2 SH3 domain as well. These pathways are suggested by experiments showing that the SH3 domains of Grb2 can bind to other proteins including dynamin (30), Vav (31, 32), Cbl (33), and several as yet unidentified targets (34). A particularly important role for Grb2 in human cancer has been proposed for cells transformed by high levels of erbB2 (HER-2 or neu) expression (35,36). In these cells, the SH2 domain...