Adeno-associated viral (AAV) gene transfer of coagulation factor VIII and IX to skeletal muscle and liver of murine and canine models of hemophilia A and B have resulted in sustained systemic expression and, in several studies, in complete cure of the bleeding disorder. These impressive results prompted initiation of two Phase I/II clinical trials to evaluate the safety of AAV-factor IX gene transfer to muscle and liver of patients with severe hemophilia B. Herein, we have reviewed results from studies in animals with hemophilia, early experience with the vector system in the clinic, recent innovative approaches in vector design and delivery, and strategies to circumvent immunological limitations. Taken together, these studies provide much encouragement for the possibility of future clinical success, but also point out hurdles that still have to be overcome.