Infection of tumor cells by herpes simplex virus 1 (HSV-1) results in cell destruction and production of progeny virion in a process referred to as viral oncolysis. In this study, an HSV-1 mutant (HSV1yCD) was engineered such that the viral ribonucleotide reductase gene is disrupted by sequences encoding yeast cytosine deaminase, which efficiently metabolizes the prodrug 5-fluorocytosine (5-FC) to 5-fluorouracil (5-FU). HSV1yCD-infected cells convert 5-FC to 5-FU, which enhances cytotoxicity without significantly reducing viral replication and oncolysis. Oncolysis by a replicating HSV-1 mutant combined with therapeutic transgene delivery represents a new paradigm; HSV1yCD-infected cells are destroyed by viral replication, and uninfected cells are subjected to bystander killing from both progeny virion and extracellular diffusion of 5-FU. In contrast, HSV1yCD-mediated bioactivation of another prodrug, ganciclovir, impairs viral replication. HSV1yCD administered into the portal venous system replicates preferentially in liver metastases rather than normal liver. The anti-neoplastic activity of HSV1yCD combined with systemic 5-FC administration is greater than that achieved with HSV-1 replication alone. Combination oncolysis and prodrug bioactivation leads to significant prolongation of survival in mice with diffuse liver metastases.