Abstract: The yeast Bem1p SH3b and Nbp2p SH3 domains are unusual because they bind to peptides containing the same consensus sequence, yet they perform different functions and display low sequence similarity. In this work, by analyzing the interactions of these domains with six biologically relevant peptides containing the consensus sequence, they are shown to possess finely tuned and distinct binding specificities. We also identify a residue in the Bem1p SH3b domain that inhibits binding, yet is highly conserved for the purpose of preventing nonspecific interactions. Substitution of this residue results in a marked reduction of in vivo function that is caused by titration of the domain away from its proper targets through nonspecific interactions with other proteins. This work provides a clear illustration of the importance of intrinsic binding specificity for the function of protein-protein interaction modules, and the key role of "negative" interactions in determining the specificity of a domain.