Phosphotyrosine (pTyr) is an essential component of biological signaling, often being a determinant of protein-protein interactions. Accordingly, a number of drug discovery efforts targeting signal transduction pathways have included phosphotyrosine and analogues as essential components of the lead compounds. Toward the goal of improved biological efficacy, the phosphonate and difluoro phosphonate analogues of pTyr have been employed in inhibitor design because of their stability to hydrolysis and enhanced binding affinity in certain cases. To quantitate the contribution of aqueous solubility of pTyr, phosphonomethyl phenylalanine (Pmp), and difluorophosphonomethyl phenylalanine (F(2)Pmp) to their relative binding affinities, free energy perturbation calculations were undertaken on the mimetics phenol phosphate (PP), benzyl phosphonate (BP), and difluorobenzyl phosphonate (F2BP), including development of empirical force field parameters compatible with the CHARMM all-atom force fields. Notably, it is shown that the most favorably solvated compound of the series is BP, followed by PP, with F2BP the least favorably solvated for both the mono- and dianionic forms of the compounds. The molecular origin of this ordering is shown to be due to changes in charge distribution, in the comparatively larger size of the fluorine atoms, as well as in differences of local solvation between PP and BP. The implications of the differences in aqueous solubility toward the relative binding potencies of pTyr-, Pmp-, and F(2)Pmp-containing peptide ligands are discussed. Our results indicate that one general principle explaining the efficacy of selective fluorination to enhance binding affinities may lie in the ability of fluorine atoms to increase the hydrophobicity of a ligand while maintaining its capability to form hydrogen bonds.