Gene therapy is gaining momentum as a method of treating human disease. Initially conceived as a strategy to complement defective genes in monogenic disorders, the scope of gene therapy has expanded to encompass a variety of applications. Likewise, the molecular tools for gene delivery have evolved and diversified to meet these various therapeutic needs. Recombinant adeno-associated virus (rAAV) has made significant strides toward clinical application with an excellent safety profile and successes in several clinical trials. This review covers the basic biology of rAAV as a gene therapy vector as well as its advantages compared with other methods of gene delivery. The status of clinical trials utilizing rAAV is also discussed in detail. In conclusion, methods of engineering the vector to overcome challenges identified from these trials are covered, with emphasis on modification of the viral capsid to increase the tissue/cell-specific targeting and transduction efficiency.