The creation of diversity in populations of polypeptides has become an important tool in the derivation of polypeptides with useful characteristics. This requires efficient methods to create diversity coupled with methods to select polypeptides with desired properties. In this review we describe the use of in vivo recombination as a powerful way to generate diversity. The novel principles for the recombination process and several applications of this process for the creation of phage antibody libraries are described. The advantage and disadvantages are discussed and possible future exploitation presented.