Immunoglobulin G-based monoclonal antibodies (mAbs) have been effective in treating various diseases, but their large molecular size can limit their penetration of tissue and efficacy in multifactorial diseases, necessitating the exploration of alternative forms. In this study, we constructed a phage display library comprising single-domain antibodies (sdAbs; or “VHHs”), known for their small size and remarkable stability, using a total of 1.6 × 109 lymphocytes collected from 20 different alpacas, resulting in approximately 7.16 × 1010 colonies. To assess the quality of the constructed library, next-generation sequencing-based high-throughput profiling was performed, analyzing approximately 5.65 × 106 full-length VHH sequences, revealing 92% uniqueness and confirming the library’s diverse composition. Systematic characterization of the library revealed multiple sdAbs with high affinity for three therapeutically relevant antigens. In conclusion, our alpaca sdAb phage display library provides a versatile resource for diagnostics and therapeutics. Furthermore, the library’s vast natural VHH antibody repertoire offers insights for generating humanized synthetic sdAb libraries, further advancing sdAb-based therapeutics.