The structural and functional characterization of Src homology-2 (SH2) domains and their relationship to catalytic proteins (e.g., kinases, phosphatases, and lipases) or non-catalytic proteins (e.g., upstream adapters, and downstream transcription factors) has significantly impacted our understanding of signal transduction pathways and the identification of promising therapeutic targets for drug discovery. Such SH2-containing proteins are known to be intimately involved in the regulation of a number of cellular processes, including growth, mitogenesis, motility, metabolism, and gene transcription. Molecular recognition and biochemical selectivity exists for various SH2 domains based on their binding to phosphotyrosine (pTyr) and contiguous C-terminal amino acids of cognate protein 'partners' in a sequence-dependent manner (i.e., -pTyr-AA(1)-AA(2)-AA(3)-) which result in the formation of signal transduction protein complexes in cells. In recent years, drug discovery efforts have advanced peptidomimetic and nonpeptide inhibitors of such protein-protein interactions based on mimicking pTyr-containing peptide ligands as well as SH2 structure-based de novo design of nonpeptide templates that can capture key binding sites on the target protein. Noteworthy are peptidomimetic and nonpeptide inhibitors of Src, Lck, Grb2, PI-3K, and Zap70 from pioneering efforts that led to the first examples of cellularly and in vivo active SH2 inhibitors. This mini-review highlights key achievements in SH2 inhibitor drug discovery with an emphasis on peptidomimetic and nonpeptide lead compounds in terms of structure-based design, key chemical and biological properties, and proof-of-concept studies relative to further defining the role(s) of SH2 domains in signal transduction processes, cellular functions, and in vivo disease models.