Histopathologic examination reveals that most human tumors are associated with diverse immune cell infiltrates, but the roles of host reactions in disease pathogenesis and prognosis remain to be fully clarified. Recent investigations in genetically engineered murine tumor models have uncovered dual functions for immune responses during cancer development and progression. Alterations in tumor cell gene expression profiles and coding sequences may trigger the activation of cytotoxic lymphocytes, which act to restrain tumor growth. In contrast, persistent inflammatory reactions, which may be driven by infection, environmental toxins, or impaired immune regulation, create a microenvironment that fosters tumor cell growth, survival, invasion, and dissemination. The dynamic interplay of these competing responses appears to be a critical event in cancer pathogenesis, with tumor promotion and immune evasion proving dominant in clinically evident disease. Nonetheless, longitudinal studies of patient cohorts have demonstrated that particular histopathologic and genetic signatures of cytotoxic lymphocyte reactions provide important prognostic information. Here, we discuss the dual roles of immunity in cancer development, focusing on gastrointestinal malignancies, given the depth of recent insights into the mechanisms underlying these tumors.