Recently, we described llama antibody fragments (VHH) that can neutralize human immunodeficiency virus, type 1 (HIV-1). These VHH were obtained after selective elution of phages carrying an immune library raised against gp120 of HIV-1 subtype B/C CN54 with soluble CD4. We describe here a new, family-specific approach to obtain the largest possible diversity of related VHH that compete with soluble CD4 for binding to the HIV-1 envelope glycoprotein. The creation of this family-specific library of homologous VHH has enabled us to isolate phages carrying similar nucleotide sequences as the parental VHH. These VHH displayed varying binding affinities and neutralization phenotypes to a panel of different strains and subtypes of HIV-1. Sequence analysis of the homologs showed that the C-terminal three amino acids of the CDR3 loop were crucial in determining the specificity of these VHH for different subtype C HIV-1 strains. There was a positive correlation between affinity of VHH binding to gp120 of HIV-1 IIIB and the breadth of neutralization of diverse HIV-1 envelopes. The family-specific approach has therefore allowed us to better understand the interaction of the CD4-binding site antibodies with virus strain specificity and has potential use for the bioengineering of antibodies and HIV-1 vaccine development.