Situation Two (a.k.a. Situation 2) was a British independent record label founded in 1981 by Peter Kent as an offshoot of the Beggars Banquet label. The name is a reference to Bauhaus's old management company, Situation 1.

At the time, Beggars Banquet releases were often distributed by WEA; to appeal to the indie audience and to get releases into the UK Indie Chart, Situation Two, as well as its sister label 4AD (which Kent had co-founded a year earlier with Ivo Watts-Russell, but soon left), were created.

During its 11-year history, Situation Two came to prominence as the home for a varied number of indie favourites. These included Madchester band the Charlatans, early incarnations of the Cult, Bauhaus side project Tones on Tail, the solo work of former Bauhaus member David J, and cult bands like the Associates, Fields of the Nephilim, Thee Hypnotics, Gene Loves Jezebel, Play Dead, Red Lorry Yellow Lorry and Buffalo Tom.

When Situation Two was dissolved in 1992, many of the roster's releases were then issued on the parent Beggars Banquet label, and several were later included on the 1999 Beggars compilation album Pspyched!.