Cell competition is a homeostatic process in which proliferating cells compete for survival. Elimination of otherwise normal healthy cells through competition is important during development and has recently been shown to contribute to maintaining tissue health during organismal aging. The mechanisms that allow for ongoing cell competition during adult life could, in principle, contribute to tumorigenesis. However, direct evidence supporting this hypothesis has been lacking. Here, we provide evidence that cell competition drives tumor formation in a Drosophila model of epithelial cancer. Cells expressing EGFR together with the conserved microRNA miR-8 acquire the properties of supercompetitors. Neoplastic transformation and metastasis depend on the ability of these cells to induce apoptosis and engulf nearby cells. miR-8 expression causes genome instability by downregulating expression of the Septin family protein Peanut. Cytokinesis failure due to downregulation of Peanut is required for tumorigenesis. This study provides evidence that the cellular mechanisms that drive cell competition during normal tissue growth can be co-opted to drive tumor formation and metastasis. Analogous mechanisms for cytokinesis failure may lead to polyploid intermediates in tumorigenesis in mammalian cancer models.