Oncolytic viruses exert an anti-tumour effect through two mechanisms: direct oncolytic and indirect immune-mediated mechanisms. Although oncolytic herpes simplex virus type 1 (HSV-1) has been approved for melanoma treatment and is being examined for its applicability to a broad spectrum of malignancies, it is not known whether it has an anti-myeloma effect. In the present study, we show that the third-generation oncolytic HSV-1, T-01, had a direct oncolytic effect on five of six human myeloma cell lines in vitro. The anti-tumour effect was enhanced in the presence of peripheral blood mononuclear cells (PBMCs) from healthy individuals and, to a lesser extent, from patients with myeloma. The enhancing effect of PBMCs was abrogated by blocking type I interferons (IFNs) or by depleting plasmacytoid dendritic cells (pDCs) or natural killer (NK) cells, suggesting that pDC-derived type I IFNs and NK cells dominated the anti-tumour effect. Furthermore, the combination of T-01 and lenalidomide exhibited enhanced cytotoxicity, and the triple combination of T-01, lenalidomide and IFN-a had a maximal effect. These data indicate that oncolytic HSV-1 represents a viable therapy for plasma cell neoplasms through direct oncolysis and immune activation governed by pDCs and NK cells. Lenalidomide is likely to augment the anti-myeloma effect of HSV-1.