Approaches to improve the oncolytic potency of replication-competent adenoviruses include the insertion of therapeutic transgenes into the viral genome. Little is known about the levels and duration of in vivo transgene expression by cells infected with such "armed" viruses. Using a tumor-selective adenovirus encoding firefly luciferase (AdDelta24CMV-Luc) we investigated these questions in an intracranial mouse model for malignant glioma. Luciferase expression was detected by bioluminescence imaging, and the effect of the immunosuppressive agent cyclophosphamide (CPA) on transgene expression was assessed. Intratumoral AdDelta24CMV-Luc injection led to a localized dose-dependent expression of luciferase. Surprisingly, this expression decreased rapidly during the course of 14 days. In contrast, mice injected with nonreplicating Ad.CMV-Luc demonstrated stable transgene expression. Treatment of mice with CPA in combination with AdDelta24CMV-Luc retarded the loss of transgene expression. Staining of mouse brains for inflammatory cells demonstrated decreased tumor infiltration by immune cells in CPA-treated mice. Moreover, in immunodeficient NOD/SCID mice loss of transgene expression was less rapid and not prevented by CPA treatment. Together, our data demonstrate that transgene expression and viral replication decrease rapidly after intratumoral injection of oncolytic adenovirus in mouse brains and that treatment with the immunomodulator CPA prolongs viral-mediated gene expression.