Oncolytic virus (OV) is a new therapeutic strategy for cancer treatment. OVs can selectively infect and destroy cancer cells, and therefore act as an in situ cancer vaccine by releasing tumor-specific antigens. Moreover, they can remodel the tumor microenvironment toward a T cell-inflamed phenotype by stimulating widespread host immune responses against the tumor. Recent evidence suggests several possible applications of OVs against cancer, especially in combination with immune checkpoint inhibitors. In this review, we describe the molecular mechanisms of oncolytic virotherapy and OV-induced immune responses, provide a brief summary of recent preclinical and clinical updates on this rapidly evolving field, and discuss a combinational strategy that is able to overcome the limitations of OV-based monotherapy.