Recombinant human erythropoietin (rhEPO), a glycoprotein hormone regulating red blood cell (RBC) formation, is used for the treatment of cancer-related anemia. The effect of rhEPO on tumor growth, however, remains controversial. Here, we report the construction and characterization of the recombinant vaccinia virus (VACV) GLV-1h210, expressing hEPO. GLV-1h210 was shown to replicate in and kill A549 lung cancer cells in culture efficiently. In mice bearing A549 lung cancer xenografts, treatment with a single intravenous dose of GLV-1h210 resulted in tumor-specific production and secretion of functional hEPO, which exerted an effect on RBC progenitors and precursors in the mouse bone marrow, leading to a significant increase in the number of RBCs and in the level of hemoglobin. Furthermore, virally expressed hEPO, but not exogenously added rhEPO, enhanced virus-mediated green fluorescent protein (GFP) expression in tumors and subsequently accelerated tumor regression when compared with the treatment with the parental virus GLV-1h68 or GLV-1h209 that expressed a nonfunctional hEPO protein. Moreover, intratumorally expressed hEPO caused enlarged tumoral microvessels, likely facilitating virus spreading. Taken together, VACV-mediated intratumorally expressed hEPO not only enhanced oncolytic virotherapy but also simultaneously alleviated cancer-related anemia.