Random peptide ligands displayed on viral capsids are emerging tools for selection of targeted gene transfer vectors even without prior knowledge of the potential target cell receptor. We have previously introduced adeno-associated viral (AAV)-displayed peptide libraries that ensure encoding of displayed peptides by the packaged AAV genome. A major limitation of these libraries is their contamination with wild-type (wt) AAV. Here we describe a novel and improved library production system that reliably avoids generation of wt AAV by use of a synthetic cap gene. Selection of targeted AAV vectors from wt-containing and the novel wt-free libraries on cell types with different permissivity for wt AAV2 replication suggested the superiority of the wt-free library. However, from both libraries highly specific peptide sequence motifs were selected which improved transduction of cells with moderate or low permissivity for AAV2 replication. Strong reduction of HeLa cell transduction compared to wt AAV2 and only low level transduction of non-target cells by some selected clones showed that not only the efficiency but also the specificity of gene transfer was improved. In conclusion, our study validates and improves the unique potential of virus display libraries for the development of targeted gene transfer vectors.