The smallest eigenvalue of a graph is the smallest eigenvalue of its adjacency matrix. We show that the family of graphs with smallest eigenvalue at least
$-\lambda $ can be defined by a finite set of forbidden induced subgraphs if and only if
$\lambda < \lambda ^*$, where
$\lambda ^* = \rho ^{1/2} + \rho ^{-1/2} \approx 2.01980$, and
$\rho $ is the unique real root of
$x^3 = x + 1$. This resolves a question raised by Bussemaker and Neumaier. As a byproduct, we find all the limit points of smallest eigenvalues of graphs, supplementing Hoffman’s work on those limit points in
$[-2, \infty )$.
We also prove that the same conclusion about forbidden subgraph characterization holds for signed graphs. Our impetus for the study of signed graphs is to determine the maximum cardinality of a spherical two-distance set with two fixed angles (one acute and one obtuse) in high dimensions. Denote by
$N_{\alpha , \beta }(d)$ the maximum number of unit vectors in
$\mathbb {R}^d$ where all pairwise inner products lie in
$\{\alpha , \beta \}$ with
$-1 \le \beta < 0 \le \alpha < 1$. Very recently Jiang, Tidor, Yao, Zhang, and Zhao determined the limit of
$N_{\alpha , \beta }(d)/d$ as
$d\to \infty $ when
$\alpha + 2\beta < 0$ or
$(1-\alpha )/(\alpha -\beta ) \in \{1,\sqrt 2,\sqrt 3\}$, and they proposed a conjecture on the limit in terms of eigenvalue multiplicities of signed graphs. We establish their conjecture whenever
$(1-\alpha )/(\alpha - \beta ) < \lambda ^*$.