Persistent gastritis induced by Helicobacter pylori is the strongest known risk factor for adenocarcinoma of the distal stomach, yet only a fraction of colonized persons ever develop gastric cancer. The H. pylori cytotoxin-associated gene (cag) pathogenicity island encodes a type IV secretion system that delivers the bacterial effector CagA into host cells after bacterial attachment, and cag+ strains augment gastric cancer risk. A host effector that is aberrantly activated in gastric cancer precursor lesions is beta-catenin, and activation of beta-catenin leads to targeted transcriptional up-regulation of genes implicated in carcinogenesis. We report that in vivo adaptation endowed an H. pylori strain with the ability to rapidly and reproducibly induce gastric dysplasia and adenocarcinoma in a rodent model of gastritis. Compared with its parental noncarcinogenic isolate, the oncogenic H. pylori strain selectively activates beta-catenin in model gastric epithelia, which is dependent on translocation of CagA into host epithelial cells. Beta-catenin nuclear accumulation is increased in gastric epithelium harvested from gerbils infected with the H. pylori carcinogenic strain as well as from persons carrying cag+ vs. cag- strains or uninfected persons. These results indicate that H. pylori-induced dysregulation of beta-catenin-dependent pathways may explain in part the augmentation in the risk of gastric cancer conferred by this pathogen.