Interleukin-1 (IL-1) includes a family of closely related genes; the two major agonistic proteins, IL-1alpha and IL-1beta, are pleiotropic and affect mainly inflammation, immunity and hemopoiesis. The IL-1Ra antagonist is a physiological inhibitor of pre-formed IL-1. Recombinant IL-1alpha and IL-1beta bind to the same receptors and induce the same biological functions. As such, the IL-1 molecules have been considered identical in normal homeostasis and in disease. However, the IL-1 molecules differ in their compartmentalization within the producing cell or the microenvironment. Thus, IL-1beta is solely active in its secreted form, whereas IL-1alpha is mainly active in cell-associated forms (intracellular precursor and membrane-bound IL-1alpha) and only rarely as a secreted cytokine, as it is secreted only in a limited manner. IL-1 is abundant at tumor sites, where it may affect the process of carcinogenesis, tumor growth and invasiveness and also the patterns of tumor-host interactions. Here, we review the effects of microenvironment- and tumor cell-derived IL-1 on malignant processes in experimental tumor models and in cancer patients. We propose that membrane-associated IL-1alpha expressed on malignant cells stimulates anti-tumor immunity, while secretable IL-1beta, derived from the microenvironment or the malignant cells, activates inflammation that promotes invasiveness and also induces tumor-mediated suppression. Inhibition of the function of IL-1 by the IL-1Ra, reduces tumor invasiveness and alleviates tumor-mediated suppression, pointing to its feasibility in cancer therapy. Differential manipulation of IL-1alpha and IL-1beta in malignant cells or in the tumor's microenvironment can open new avenues for using IL-1 in cancer therapy.