Spontaneous canine mammary carcinomas (CMCs) have been widely considered a good research model for human breast cancers, which brings much attention to CMCs. In recent years, the oncolytic effect of Newcastle disease virus (NDV) on cancer cells has been widely studied, but its effect on CMCs is still unclear. This study aims to investigate the oncolytic effect of NDV LaSota strain on canine mammary carcinoma cell line (CMT‐U27) in vivo and in vitro. The in vitro cytotoxicity and immunocytochemistry experiments showed that NDV selectively replicated in CMT‐U27 cells, and inhibited cell proliferation and migration but not in MDCK cells. KEGG analysis of transcriptome sequencing indicated the importance of the TNFα and NF‐κB signalling pathways in the anti‐tumour effect of NDV. Subsequently, the significantly increased expression of TNFα, p65, phospho‐p65, caspase‐8, caspase‐3 and cleaved‐PARP proteins in the NDV group suggested that NDV induced CMT‐U27 cells apoptosis by activating the caspase‐8/caspase‐3 pathway and the TNFα/NF‐κB signalling pathway. Nude mice tumour‐bearing experiments showed that NDV could significantly decrease the growth rate of CMC in vivo. In conclusion, our study demonstrates the effective oncolytic effects of NDV on CMT‐U27 cells in vivo and in vitro, and suggests NDV as a promising candidate for oncolytic therapy.