Grb2–Sos1 interaction, mediated by the canonical binding of N-terminal SH3 (nSH3) and C-terminal SH3 (cSH3) domains of Grb2 to a proline-rich sequence in Sos1, provides a key regulatory switch that relays signaling from activated receptor tyrosine kinases to downstream effector molecules such as Ras. Here, using isothermal titration calorimetry in combination with site-directed mutagenesis, we show that the nSH3 domain binds to a Sos1-derived peptide containing the proline-rich consensus motif PPVPPR with an affinity that is nearly threefold greater than that observed for the binding of cSH3 domain. We further demonstrate that such differential binding of nSH3 domain relative to the cSH3 domain is largely due to the requirement of a specific acidic residue in the RT loop of the β-barrel fold to engage in the formation of a salt bridge with the arginine residue in the consensus motif PPVPPR. While this role is fulfilled by an optimally positioned D15 in the nSH3 domain, the chemically distinct and structurally non-equivalent E171 substitutes in the case of the cSH3 domain. Additionally, our data suggest that salt tightly modulates the binding of both SH3 domains to Sos1 in a thermodynamically distinct manner. Our data further reveal that, while binding of both SH3 domains to Sos1 is under enthalpic control, the nSH3 binding suffers from entropic penalty in contrast to entropic gain accompanying the binding of cSH3, implying that the two domains employ differential thermodynamic mechanisms for Sos1 recognition. Our new findings are rationalized in the context of 3D structural models of SH3 domains in complex with the Sos1 peptide. Taken together, our study provides structural basis of the differential binding of SH3 domains of Grb2 to Sos1 and a detailed thermodynamic profile of this key protein–protein interaction pertinent to cellular signaling and cancer.