Abstract Recombinant single domain antibody fragments (VHHs) that derive from the unusual camelid heavy chain only IgG class (HCAbs) have many favourable properties compared with single-chain antibodies prepared from conventional IgG. As a result, VHHs have become widely used as binding reagents and are beginning to show potential as therapeutic agents. To date, the source of VHH genetic material has been camels and llamas despite their large size and limited availability. Here we demonstrate that the smaller, more tractable and widely available alpaca is an excellent source of VHH coding DNA. Alpaca sera IgG consists of about 50% HCAbs, mostly of the short-hinge variety. Sequencing of DNA encoding more than 50 random VHH and hinge domains permitted the design of PCR primers that will amplify virtually all alpaca VHH coding DNAs for phage display library construction. Alpacas were immunized with ovine tumour necrosis factor α (TNFα) and a VHH phage display library was prepared from a lymph node that drains the sites of immunizations and successfully employed in the isolation of VHHs that bind and neutralize ovine TNFα.