Natural killer (NK) cells protect the host against intracellular infection and cancer. These properties are exploited in oncolytic virus (OV) therapy, where anti-viral responses result in enhanced anti-tumour immunity. This study investigated the mechanisms by which reovirus, an oncolytic dsRNA virus, modulates human NK cell activity, in an in vitro model. Activation of NK cells within PBMC was dependent on soluble type I interferons (IFN-I). Blocking experiments and signalling pathway analysis support a model in which IFN-I acts directly on NK cells to activate them, inducing phosphorylation of signal transducer and activator of transcription 1 (STAT1) and STAT4. Microarray transcriptome profiling revealed the upregulation of genes involved in several relevant pathways: IFN-I signalling, granule and granule independent NK cytotoxicity, migration and proliferation. However, despite upregulation of cell cycle associated genes, NK cells did not proliferate in response to reovirus. In fact, priming with reovirus inhibited NK cell proliferation in response to the mitogenic cytokine interleukin 15 (IL-15). Further analysis showed that reovirus priming blocked the IL-15 induced accumulation of cell cycle proteins and inhibited Akt signalling. Inhibition of proliferation was dependent on IFN-I, demonstrating that interferon can have both stimulatory and inhibitory effects on NK cells in the context of oncolytic virus therapy. The observed upregulation of cell cycle associated genes during reovirus treatment might be due to the activation of a separate, pro-proliferative pathway, which is opposed by high levels of IFN-I. These results define a pathway of NK cell activation during oncolytic reovirus treatment, and show that OV treatment acts on the spectrum of NK cell activity.