Src homology-2 (SH2) domains and their associated catalytic or noncatalytic proteins constitute critical signal transduction targets for drug discovery. Such SH2 proteins are found in the regulation of a number of cellular processes, including growth, mitogenesis, motility, metabolism, immune response, and gene transcription. From the relationship of tyrosine phosphorylation and intracellular regulation by protein-tyrosine kinases (PTKs) and protein-tyrosine phosphatases (PTPs), the dynamic and reversible binding interactions of SH2 domain containing proteins with their cognate phosphotyrosine (pTyr) containing proteins provide a third dimensionality to the orchestration of signal transduction pathways that exist as a result of pTyr formation, degradation, and molecular recognition events. This review highlights several key research achievements impacting our current understanding of SH2 structure, mechanisms, and drug discovery that underlie the role(s) of SH2 domains in signal transduction processes, cellular functions, and disease states.