Abstract Background Malignant pleural effusion (MPE) is associated with advanced stages of lung cancer and is mainly dependent on invasion of the pleura and expression of vascular endothelial growth factor (VEGF) by cancer cells. As MPE indicates an incurable disease with limited palliative treatment options and poor outcome, there is an urgent need for new and efficient treatment options. Methods In this study, we used subcutaneously generated PC14PE6 lung adenocarcinoma xenografts in athymic mice that developed subcutaneous malignant effusions (ME) which mimic pleural effusions of the orthotopic model. Using this approach monitoring of therapeutic intervention was facilitated by direct observation of subcutaneous ME formation without the need of sacrificing mice or special imaging equipment as in case of MPE. Further, we tested oncolytic virotherapy using Vaccinia virus as a novel treatment modality against ME in this subcutaneous PC14PE6 xenograft model of advanced lung adenocarcinoma. Results We demonstrated significant therapeutic efficacy of Vaccinia virus treatment of both advanced lung adenocarcinoma and tumor-associated ME. We attribute the efficacy to the virus-mediated reduction of tumor cell-derived VEGF levels in tumors, decreased invasion of tumor cells into the peritumoral tissue, and to viral infection of the blood vessel-invading tumor cells. Moreover, we showed that the use of oncolytic Vaccinia virus encoding for a single-chain antibody (scAb) against VEGF (GLAF-1) significantly enhanced mono-therapy of oncolytic treatment. Conclusions Here, we demonstrate for the first time that oncolytic virotherapy using tumor-specific Vaccinia virus represents a novel and promising treatment modality for therapy of ME associated with advanced lung cancer.