Chronic colonization of the human stomach by Helicobacter pylori, a Gram-negative bacterium, is the major cause of chronic gastritis, peptic ulcers and gastric cancer. Recent progress has elucidated important bacterial and host factors that are responsible for H. pylori-induced gastric inflammation and gastric malignancy. H. pylori cytotoxin-associated antigen A is the major oncogenic factor injected into host cells from bacteria and it disrupts epithelial cell functions. Together with H. pylori cag pathogenicity island, it causes general inflammatory stress within gastric mucosa and activates multiple oncogenic pathways in epithelial cells. A growing list of these pathways includes NF-kappaB, activator protein-1, PI3K, signal transducers and activators of transcription 3, Wnt/beta-catenin and cyclooxygenase 2. H. pylori induces epigenetic alterations, such as DNA methylation and histone modification, which play critical roles in oncogenic transformation. In addition, investigations into gastric stem cell or progenitor cell biology have shed light on the mechanisms through which gastric cancer may originate. Continued investigation in these areas will yield novel insights and help to elucidate the mechanisms of bacteria-induced carcinogenesis.