Gastric carcinoma is the second leading cause of cancer-related deaths in the world, accounting for more than 700,000 deaths each year. Recent studies have revealed that infection with cagA-positive Helicobacter pylori plays an essential role in the development of gastric carcinoma. The cagA-encoded CagA protein is delivered into gastric epithelial cells via the bacterial type IV secretion system, where it undergoes tyrosine phosphorylation by Src and Abl kinases. Tyrosine-phosphorylated CagA then acquires the ability to interact with and deregulate SHP-2 phosphatase, a bona-fide oncoprotein, deregulation of which is involved in a variety of human malignancies. CagA also binds to and inhibits PAR1b/MARK2 polarity-regulating kinase to disrupt tight junctions and epithelial apical-basolateral polarity. These CagA activities may collectively contribute to the transformation of gastric epithelial cells. Indeed, transgenic expression of CagA in mice results in the development of gastrointestinal and hematological malignancies, indicating that CagA is the first bacterial oncoprotein that acts in mammalian cells. The oncogenic potential of CagA may be further potentiated in the presence of chronic inflammation, which aberrantly induces activation-induced cytidine deaminase (AID), a member of the DNA/RNA-editing enzyme family. Ectopically expressed AID may contribute to H. pylori-initiated gastric carcinogenesis by increasing the risk of likelihood of epithelial cells acquiring mutations in cancer-related genes.