Bacillus Calmette-Guérin (BCG) has been used to treat non-muscle-invasive bladder cancer for more than 30 years. It is one of the most successful biotherapies for cancer in use. Despite long clinical experience with BCG, the mechanism of its therapeutic effect is still under investigation. Available evidence suggests that urothelial cells (including bladder cancer cells themselves) and cells of the immune system both have crucial roles in the therapeutic antitumour effect of BCG. The possible involvement of bladder cancer cells includes attachment and internalization of BCG, secretion of cytokines and chemokines, and presentation of BCG and/or cancer cell antigens to cells of the immune system. Immune system cell subsets that have potential roles in BCG therapy include CD4(+) and CD8(+) lymphocytes, natural killer cells, granulocytes, macrophages, and dendritic cells. Bladder cancer cells are killed through direct cytotoxicity by these cells, by secretion of soluble factors such as TRAIL (tumour necrosis factor-related apoptosis-inducing ligand), and, to some degree, by the direct action of BCG. Several gaps still exist in our knowledge that should be addressed in future efforts to understand this biotherapy of cancer.