Protease-activatable retroviral vectors offer the possibility of targeted gene transfer into cancer cells expressing a unique set of proteases as, for example, the matrix metalloproteases (MMPs). However, it is difficult to predict which substrate sequence will be optimally cleaved by a given tumour cell type. Therefore, we developed a novel approach that allows the selection of MMP-activatable retroviruses from libraries of viruses displaying combinatorially diversified protease substrates. Starting from a virus harbouring a standard MMP-2 substrate motif, after only two consecutive cycles of diversification and in vivo selection, MMP-activatable viruses were recovered. Biochemical characterization of the selected viruses revealed that their linker peptides showed a considerably increased sensitivity for MMP-2 cleavage, and interestingly also improved the particle incorporation rate of the Env protein. Owing to the optimized linker peptide, the selected viruses exhibited a greatly enhanced spreading efficiency through human fibrosarcoma cells, while having retained the dependency on MMP activation. Moreover, cell entry efficiency and virus titres were considerably improved as compared to the parental virus displaying the standard MMP-2 substrate. The results presented imply that retroviral protease substrate libraries allow the definition of MMP substrate specificities under in vivo conditions as well as the generation of optimally adapted tumour-specific viruses.