Cancer commonly arises at the sites of chronic inflammation and infection. Although this association has long been recognized, the reason has remained unclear. Within the gastrointestinal tract, there are many examples of inflammatory conditions associated with cancer, and these include reflux disease and Barrett’s adenocarcinoma of the esophagus, Helicobacter infection and gastric cancer, inflammatory bowel disease and colorectal cancer and viral hepatitis leading to hepatocellular carcinoma. There are several mechanisms by which chronic inflammation has been postulated to lead to cancer which includes enhanced proliferation in an endless attempt to heal damage, the presence of a persistent inflammatory environment creating a pro-carcinogenic environment and more recently a role for engraftment of circulating marrow-derived stem cells which may contribute to the stromal components of the tumor as well as the tumor mass itself. Here we review the recent advances in our understanding of the contributions of circulating bone marrow-derived stem cells to the formation of tumors in animal models as well as in human beings.