In recent years, the number of clinical trials in which adeno-associated virus (AAV) vectors have been used for in vivo gene transfer has steadily increased. The excellent safety profile, together with the high efficiency of transduction of a broad range of target tissues, has established AAV vectors as the platform of choice for in vivo gene therapy. Successful application of the AAV technology has also been achieved in the clinic for a variety of conditions, including coagulation disorders, inherited blindness, and neurodegenerative diseases, among others. Clinical translation of novel and effective “therapeutic products” is, however, a long process that involves several cycles of iterations from bench to bedside that are required to address issues encountered during drug development. For the AAV vector gene transfer technology, several hurdles have emerged in both preclinical studies and clinical trials; addressing these issues will allow in the future to expand the scope of AAV gene transfer as a therapeutic modality for a variety of human diseases. In this review, we will give an overview on the biology of AAV vector, discuss the design of AAV-based gene therapy strategies for in vivo applications, and present key achievements and emerging issues in the field. We will use the liver as a model target tissue for gene transfer based on the large amount of data available from preclinical and clinical studies.