X-linked agammaglobulinemia (XLA) is caused by mutations in the Bruton's tyrosine kinase (Btk). The absence of functional Btk leads to failure of B-cell development that incapacitates antibody production in XLA patients leading to recurrent bacterial infections. Btk SH2 domain is essential for phospholipase C-gamma phosphorylation, and mutations in this domain were shown to cause XLA. Recently, the B-cell linker protein (BLNK) was found to interact with the SH2 domain of Btk, and this association is required for the activation of phospholipase C-gamma. However, the molecular basis for the interaction between the Btk SH2 domain and BLNK and the cause of XLA remain unclear. To understand the role of Btk in B-cell development, we have determined the stability and peptide binding affinity of the Btk SH2 domain. Our results indicate that both the structure and stability of Btk SH2 domain closely resemble with other SH2 domains, and it binds with phosphopeptides in the order pYEEI > pYDEP > pYMEM > pYLDL > pYIIP. We expressed the R288Q, R288W, L295P, R307G, R307T, Y334S, Y361C, L369F, and 1370M mutants of the Btk SH2 domain identified from XLA patients and measured their binding affinity with the phosphopeptides. Our studies revealed that mutation of R288 and R307 located in the phosphotyrosine binding site resulted in a more than 200-fold decrease in the peptide binding compared to L295, Y334, Y361, L369, and 1370 mutations in the pY + 3 hydrophobic binding pocket (approximately 3- to 17-folds). Furthermore, mutation of the Tyr residue at the betaD5 position reverses the binding order of Btk SH2 domain to pYIIP > pYLDL > pYDEP > pYMEM > pYEEI. This altered binding behavior of mutant Btk SH2 domain likely leads to XLA.