Phage display libraries are widely used for selection and optimization of polypeptide ligands or protease substrates. Because they are expressed and amplified in bacterial hosts, phage are not ideal for displaying eukaryotic polypeptides or for probing mammalian cells. As retroviruses do not suffer from these limitations we constructed plasmids encoding replication-competent murine leukemia viruses displaying a virally encoded epidermal growth factor (EGF) domain at the N-terminus of the envelope glycoprotein. The EGF-displaying viruses replicated freely on EGF receptor-poor cells without deleting the displayed EGF domain but did not propagate on EGF receptor-rich cells because they were sequestered by the EGF receptors. A retrovirus display library was then generated by diversifying the seven-residue linker between the envelope glycoprotein and the displayed EGF domain. Selective pressure for loss of EGF receptor-binding activity was applied to the library by serial passage on EGF receptor-rich HT1080 cells. The selected viruses propagated on these cells with wild-type efficiencies, a phenotype that was conferred by intracellular cleavage of their displayed linker sequences. The selected linker sequences invariably presented arginine-rich motifs matching the consensus cleavage signal for furin-like proteases. Retrovirus display libraries can be used for the selection of polypeptides interacting with components of living mammalian cells.