In vivo gene replacement for the treatment of inherited disease is one of the most compelling concepts in modern medicine. Adeno-associated virus (AAV) vectors have been extensively used for this purpose and have shown therapeutic efficacy in a range of animal models. Successful translation to the clinic was initially slow, but long-term expression of donated genes at therapeutic levels has now been achieved in patients with inherited retinal disorders and haemophilia B. Recent exciting results have raised hopes for the treatment of many other diseases. As we discuss here, the prospects and challenges for AAV gene therapy are to a large extent dependent on the target tissue and the specific disease.