Cytoplasmic proteins that regulate signal transduction or induce cellular transformation, including cytoplasmic protein-tyrosine kinases, p21ras GTPase-activating protein (GAP), phospholipase C gamma, and the v-crk oncoprotein, possess one or two copies of a conserved noncatalytic domain, Src homology region 2 (SH2). Here we provide direct evidence that SH2 domains can mediate the interactions of these diverse signaling proteins with a related set of phosphotyrosine ligands, including the epidermal growth factor (EGF) receptor. In src-transformed cells GAP forms heteromeric complexes, notably with a highly tyrosine phosphorylated 62-kDa protein (p62). The stable association between GAP and p62 can be specifically reconstituted in vitro by using a bacterial polypeptide containing only the N-terminal GAP SH2 domain. The efficient phosphorylation of p62 by the v-Src or v-Fps tyrosine kinases depends, in turn, on their SH2 domains and correlates with their transforming activity. In lysates of EGF-stimulated cells, the N-terminal GAP SH2 domain binds to both the EGF receptor and p62. Fusion proteins containing GAP or v-Crk SH2 domains complex with similar phosphotyrosine proteins from src-transformed or EGF-stimulated cells but with different efficiencies. SH2 sequences, therefore, form autonomous domains that direct signaling proteins, such as GAP, to bind specific phosphotyrosine-containing polypeptides. By promoting the formation of these complexes, SH2 domains are ideally suited to regulate the activation of intracellular signaling pathways by growth factors.