Recombinant adeno-associated viral (AAV) vectors have rapidly advanced to the forefront of gene therapy in the past decade. The exponential progress of AAV-based vectors has been made possible by the isolation of several naturally occurring AAV serotypes and over 100 AAV variants from different animal species. These isolates are ideally suited to development into human gene therapy vectors due to their diverse tissue tropisms and potential to evade preexisting neutralizing antibodies against the common human AAV serotype 2. Despite their prolific application in several animal models of disease, the mechanisms underlying selective tropisms of AAV serotypes remain largely unknown. Efforts to understand cell surface receptor usage and intracellular trafficking pathways exploited by AAV continue to provide significant insight into the biology of AAV vectors. Such unique traits are thought to arise from differences in surface topology of the capsids of AAV serotypes and variants. In addition to the aforementioned naturally evolved AAV isolates, several strategies to engineer hybrid AAV serotype vectors have been formulated in recent years. The generation of mosaic or chimeric vectors through the transcapsidation or marker-rescue/domain-swapping approach, respectively, is notable in this regard. More recently, combinatorial strategies for engineering AAV vectors using error-prone PCR, DNA shuffling, and other molecular cloning techniques have been established. The latter library-based approaches can serve as powerful tools in the generation of low-immunogenic and cell/tissue type-specific AAV vectors for gene delivery. This review is focused on recent developments in the isolation of novel AAV serotypes and isolates, their production and purification, diverse tissue tropisms, mechanisms of cellular entry/trafficking, and capsid structure. Strategies for engineering hybrid AAV vectors derived from AAV serotypes and potential implications of the rapidly expanding AAV vector toolkit are discussed.