Oncolytic viruses represent a new class of therapeutic agents that promote anti-tumour responses through a dual mechanism of action that is dependent on selective tumour cell killing and the induction of systemic anti-tumour immunity. The molecular and cellular mechanisms of action are not fully elucidated but are likely to depend on viral replication within transformed cells, induction of primary cell death, interaction with tumour cell antiviral elements and initiation of innate and adaptive anti-tumour immunity. A variety of native and genetically modified viruses have been developed as oncolytic agents, and the approval of the first oncolytic virus by the US Food and Drug Administration (FDA) is anticipated in the near future. This Review provides a comprehensive overview of the basic biology supporting oncolytic viruses as cancer therapeutic agents, describes oncolytic viruses in advanced clinical trials and discusses the unique challenges in the development of oncolytic viruses as a new class of drugs for the treatment of cancer.