Vesicular stomatitis virus (VSV) selectively replicates in tumor but not in normal cells and is being developed as an oncolytic agent for cancer therapy. Here we report the construction of a recombinant VSV capable of inducing syncytia formation between tumor cells through membrane fusion at neutral pH, which led to enhanced oncolytic properties against multifocal hepatocellular carcinoma (HCC) in the livers of immunocompetent rats. Recombinant VSV vectors were constructed by insertion into their genome a transcription unit expressing a control or fusion protein derived from Newcastle disease virus. In vitro characterization of the recombinant fusogenic VSV vector on human and rat HCC cells showed extensive syncytia formation and significantly enhanced cytotoxic effects. In vivo, administration of fusogenic VSV into the hepatic artery of Buffalo rats bearing syngeneic multifocal HCC lesions in their livers resulted in syncytia formation exclusively within the tumors, and there was no collateral damage to the neighboring hepatic parenchyma. The fusogenic VSV also conferred a significant survival advantage over a nonfusogenic control virus in the treated animal (P = 0.0078, log-rank test). The results suggest that fusogenic VSV can be developed into an effective and safe therapeutic agent for cancer treatment in patients, including those with multifocal HCC in the liver.