Oncolytic virus (OV)-based immunotherapy has emerged as a promising strategy for cancer treatment, offering a unique potential to selectively target malignant cells while sparing normal tissues. However, the immunosuppressive nature of tumor microenvironment (TME) poses a substantial hurdle to the development of OVs as effective immunotherapeutic agents, as it restricts the activation and recruitment of immune cells. This review elucidates the potential of OV-based immunotherapy in modulating the immune landscape within the TME to overcome immune resistance and enhance antitumor immune responses. We examine the role of OVs in targeting specific immune cell populations, including dendritic cells, T cells, natural killer cells, and macrophages, and their ability to alter the TME by inhibiting angiogenesis and reducing tumor fibrosis. Additionally, we explore strategies to optimize OV-based drug delivery and improve the efficiency of OV-mediated immunotherapy. In conclusion, this review offers a concise and comprehensive synopsis of the current status and future prospects of OV-based immunotherapy, underscoring its remarkable potential as an effective immunotherapeutic agent for cancer treatment.