The tyrosine kinase pp60(c-src) has been implicated as being a potential therapeutic target in several human diseases including cancer and osteoporosis. An important region within this kinase is the SH2 domain (Src homology 2) which binds to phosphorylated tyrosine residues contained within specific peptide sequences. Homologous domains are found in a variety of cytoplasmic proteins and have been shown to be essential for controlling many important signaling pathways. Developing specific inhibitors of SH2 interactions would therefore be extremely useful for modulating a variety of signaling pathways and potentially be useful for the treatment of human disease. Current methodology for the development of organic molecules as drug leads requires the ability to test thousands of individual compounds or natural product extracts in biochemical assays. Such tests must be reproducible, simple, and versatile. This paper describes an assay based on fluorescence polarization for measuring the binding of compounds to the Src-SH2 domain. The assay is insensitive to changes in fluorescence intensity working even in solutions with moderate optical density and functions in the presence of up to 20% dimethyl sulfoxide. These features make it especially useful for high-throughput screening of both natural and synthetic compound libraries. (C) 1997 Academic Press.