Bladder cancer has a recurrence rate of up to 80% and many patients require multiple treatments that often fail, eventually leading to disease progression. In particular, standard of care for high‐grade disease, Bacillus Calmette–Guérin (BCG), fails in 30% of patients. We have generated a novel oncolytic vaccinia virus (VACV) by mutating the F4L gene that encodes the virus homolog of the cell‐cycle‐regulated small subunit of ribonucleotide reductase (RRM2). The F4L‐deleted VACVs are highly attenuated in normal tissues, and since cancer cells commonly express elevated RRM2 levels, have tumor‐selective replication and cell killing. These F4L‐deleted VACVs replicated selectively in immune‐competent rat AY‐27 and xenografted human RT112‐luc orthotopic bladder cancer models, causing significant tumor regression or complete ablation with no toxicity. It was also observed that rats cured of AY‐27 tumors by VACV treatment developed anti‐tumor immunity as evidenced by tumor rejection upon challenge and by ex vivo cytotoxic T‐lymphocyte assays. Finally, F4L‐deleted VACVs replicated in primary human bladder cancer explants. Our findings demonstrate the enhanced safety and selectivity of F4L‐deleted VACVs, with application as a promising therapy for patients with BCG‐refractory cancers and immune dysregulation.