Recombinant adeno-associated virus (rAAV) vectors have emerged as highly promising for use in gene transfer for a variety of reasons, including lack of pathogenicity and wide host range. In addition, all virus-encoded genes have been removed from standard rAAV vectors, resulting in their comparatively low intrinsic immunogenicity. For gene replacement strategies, transgenes encoded by rAAV vectors may induce less robust host immune responses than other vectors in vivo. However, under appropriate conditions, host immune responses can be generated against rAAV-encoded transgenes, raising the potential for their use in vaccine development. In this review, we summarize current understanding of the generation of both undesirable and beneficial host immune responses directed against rAAV and encoded transgenes, and how they might be exploited for optimal use of this promising vector system.