Bacteriophage vectors, such as lambda, M13, and T7 phages, are utilized in genetic engineering to efficiently transfer and clone genes by exploiting their natural ability to infect bacteria. Lambda phages can carry large DNA inserts and utilize both lytic and lysogenic cycles for replication, while M13 phages are useful for cloning smaller fragments without lysing the host cell. The advantages of using bacteriophage vectors include high efficiency, capacity for large DNA inserts, the ability to express proteins, and stability in bacterial cultures.