SH2 domains bind to specific phosphotyrosine-containing sites in a fashion dictated by the amino acids flanking the phosphotyrosine. Attention has focused on the role of the three COOH-terminal positions (+1 to +3) in generating specificity. Autophosphorylation of Tyr1021 in the tail of the beta-receptor for platelet-derived growth factor creates a specific binding site for the COOH-terminal SH2 domain of phospholipase C (PLC)-gamma 1. We show that the residues 4 and 5 amino acids COOH-terminal to Tyr1021 (+4 Leu and +5 Pro) are required for efficient PLC-gamma 1 binding, and that their replacement with the corresponding residues from a phosphatidylinositol 3'-kinase binding site abrogates stable association with PLC-gamma 1. In contrast, replacement of the +3 Pro with Met produces a Tyr1021 site with mixed specificity that binds both PLC-gamma 1 and phosphatidylinositol 3'-kinase. This motif is rendered specific for phosphatidylinositol 3'-kinase by further substitution of the +4 Leu. These results indicate that the +4 and +5 residues are important for the selective binding of specific SH2 domains. This study suggests that phosphotyrosine sites can be tailored to bind one or more SH2 domains with high affinity, depending on the combination of residues in the +1 to +5 positions.