Src homology-2 (SH2) domains recognize specific phosphotyrosyl (pY) proteins and promote protein-protein interactions. In their classical binding mode, the SH2 domain makes specific contacts with the pY residue and the three residues immediately C-terminal to the pY, although for a few SH2 domains, residues N-terminal to pY have recently been shown to also contribute to the overall binding affinity and specificity. In this work, the ability of an SH2 domain to bind to the N-terminal side of pY has been systematically examined. A pY peptide library containing completely randomized residues at positions -5 to -1 (relative to pY, which is position 0) was synthesized on TentaGel resin and screened against the four SH2 domains of phosphatases SHP-1 and SHP-2. Positive beads that carry high-affinity ligands of the SH2 domains were identified using an enzyme-linked assay, and the peptides were sequenced by partial Edman degradation and matrix-assisted laser desorption ionization mass spectrometry. The N-terminal SH2 domain of SHP-2 binds specifically to peptides of the consensus sequence (H/F)XVX(T/S/A)pY. Further binding studies with individually synthesized pY peptides show that pY and the five residues N-terminal to pY, but not any of the C-terminal residues, are important for binding. The other three SH2 domains also bound to the library beads, albeit more weakly, and the selected peptides did not show any clear consensus. These results demonstrate that at least some SH2 domains can bind to pY peptides in an alternative mode by recognizing only the residues N-terminal to pY.