Dysbiosis, the imbalance of an organism’s commensal microbiota, may drive dysplasia and tumorigenesis via aberrant immune response, increased inflammation, and stem cell overactivation. The Drosophila gut is a useful model to study host-microbiota interactions leading to tumorigenesis due to its molecular, cellular, and physiological similarity with the human gut and its simplicity at the host and microbiome levels. A primary lesson learned from Drosophila gut studies is that microbiota and pathogenic microbes, such as bacteria and viruses, induce multiple innate immune and stress signaling pathways in enterocytes and other gut cells that, in turn, activate mitogens driving regenerative stem cell proliferation. A second important lesson learned from Drosophila gut studies is that wild-type and genetically predisposed intestinal epithelial cells are more likely to initiate tumorigenesis and tissue invasion upon interaction with intestinal microbes. Lastly, microbial nutrients may directly affect intestinal stem cell proliferation and tissue regeneration. This review discusses the mechanisms by which the microbiome influences directly and indirectly stem cell proliferation, tumorigenesis, and tumor cell dissemination, shedding light on microbiota-mediated cancer predisposition.