Signal transducers and activators of transcription (STAT) 1 and STAT3 are activated by overlapping but distinct sets of cytokines. STATs are recruited to the different cytokine receptors through their Src homology (SH) 2 domains that make highly specific interactions with phosphotyrosine-docking sites on the receptors. We used a degenerate phosphopeptide library synthesized on 35-microm TentaGel beads and fluorescence-activated bead sorting to determine the sequence specificity of the peptide-binding sites of the SH2 domains of STAT1 and STAT3. The large bead library allowed not only peptide sequencing of pools of beads but also of single beads. The method was validated through surface plasmon resonance measurements of the affinities of different peptides to the STAT SH2 domains. Furthermore, when selected peptides were attached to a truncated erythropoietin receptor and stably expressed in DA3 cells, activation of STAT1 or STAT3 could be achieved by stimulation with erythropoietin. The combined analysis of pool sequencing, the individual peptide sequences, and plasmon resonance measurements allowed the definition of SH2 domain binding motifs. STAT1 preferentially binds peptides with the motif phosphotyrosine-(aspartic acid/glutamic acid)-(proline/arginine)-(arginine/proline/glutamine), whereby a negatively charged amino acid at +1 excludes a proline at +2 and vice versa. STAT3 preferentially binds peptides with the motif phosphotyrosine-(basic or hydrophobic)-(proline or basic)-glutamine. For both STAT1 and STAT3, specific high affinity phosphopeptides were identified that can be used for the design of inhibitory molecules.