To identify serum-inducible genes in the insulin-producing cell line beta TC-1, a library subtraction screening procedure was performed on serum-deprived (G0) and serum-restimulated (G1) insulin-producing beta TC-1 cells. A cDNA containing a motif with strong homology to Src homology 2 (SH2) domains was found using this procedure and called Shb. The Shb cDNA contains two methionine codons in its N-terminus and thus may code for two proteins of 67 and 56 kDa, each with one SH2 domain in its C-terminus. No other structural similarity to proteins with catalytic activity could be detected, suggesting that Shb is a so called adaptor. Shb contains the proline-rich sequence PPPGPGR between the two proposed initiator methionines which resembles a sequence for binding to Src homology 3 (SH3) domains. A second proline-rich sequence was detected after the second methionine codon. The Shb cDNA hybridized to a similar or identical mRNA of 3.1 kb expressed in mouse brain, liver, kidney, heart, NIH3T3 fibroblasts and beta TC-1 cells. Western blot analysis of the same tissues using an antiserum directed against a synthetic peptide corresponding to a part of the SH2 domain of Shb, revealed reactivity with two proteins of 56 and 67 kDa. In addition, a third reactive component of 40 kDa was detected in most tissues. Transfection and transient expression of the Shb cDNA in COS-1 cells yielded increased expression of the 67, 56 and 40 kDa proteins. Transfection and stable expression of the Shb cDNA in pig aortic endothelial cells showed increased expression primarily of the 67 kDa protein. A fusion protein consisting of the SH2 domain of Shb linked to glutathione S-transferase showed increased binding to glycoproteins of cells stimulated with platelet-derived growth factor (PDGF-BB). Furthermore, the autophosphorylated PDGF beta-receptor but not the autophosphorylated epidermal growth factor (EGF) receptor bound specifically to immobilized fusion protein. It is concluded that Shb is a novel SH2-containing protein with proline-rich domains and therefore probably involved in the signal-transduction of some ligand-activated tyrosine kinase receptors.