Helicobacter pylori cagA-positive strain delivers the CagA oncoprotein into gastric epithelial cells and at the same time elicits stomach inflammation. To experimentally investigate the pathophysiological interplay between CagA and inflammation, transgenic mice systemically expressing the bacterial cagA gene were treated with a colitis inducer, dextran sulfate sodium (DSS). Compared with control mice, DSS-induced colitis was markedly deteriorated in cagA-transgenic mice. In the colonic epithelia of cagA-transgenic mice, there was a substantial decrease in the level of IκB, which binds and sequesters NF-κB in the cytoplasm. This IκB reduction was due to CagA-mediated inhibition of PAR1, which may stimulate IκB degradation by perturbing microtubule stability. Whereas the CagA-mediated IκB reduction did not automatically activate NF-κB, it lowered the threshold of NF-κB activation by inflammogenic insults, thereby contributing to colitis exacerbation in cagA-transgenic mice. CagA also activates inflammasomes independently of NF-κB signaling, which further potentiates inflammation. The incidence of colonic dysplasia was elevated in DSS-treated cagA-transgenic mice due to a robust increase in the number of pre-cancerous flat-type dysplasias. Thus, CagA deteriorated inflammation, whereas inflammation strengthened the oncogenic potential of CagA. This work revealed that H. pylori CagA and inflammation reinforce each other in creating a downward spiral that instigates neoplastic transformation.