Adeno-associated virus (AAV) vectors can transduce cells by several mechanisms, including (i) gene addition by chromosomal integration or episomal transgene expression or (ii) gene targeting by modification of homologous chromosomal sequences. The latter process can be used to correct a variety of mutations in chromosomal genes with high fidelity and specificity. In this study, we used retroviral vectors to introduce mutant alkaline phosphatase reporter genes into normal human cells and subsequently corrected these mutations with AAV gene targeting vectors. We find that increasing the length of homology between the AAV vector and the target locus improves gene correction rates, as does positioning the mutation to be corrected in the center of the AAV vector genome. AAV-mediated gene targeting increases with time and multiplicity of infection, similar to AAV-mediated gene addition. However, in contrast to gene addition, genotoxic stress did not affect gene targeting rates, suggesting that different cellular factors are involved. In the course of these studies, we found that (i) vector genomes less than half of wild-type size could be packaged as monomers or dimers and (ii) packaged dimers consist of inverted repeats with covalently closed hairpins at either end. These studies should prove helpful in designing AAV gene targeting vectors for basic research or gene therapy.