Infection with the human gastric pathogen Helicobacter pylori is associated with a spectrum of diseases including gastritis, peptic ulcers, gastric adenocarcinoma, and gastric mucosa-associated lymphoid tissue lymphoma. The cytotoxin-associated gene A (CagA) protein of H. pylori, which is translocated into host cells via a type IV secretion system, is a major risk factor for disease development. Experiments in gastric tissue culture cells have shown that once translocated, CagA activates the phosphatase SHP-2, which is a component of receptor tyrosine kinase (RTK) pathways whose over-activation is associated with cancer formation. Based on CagA's ability to activate SHP-2, it has been proposed that CagA functions as a prokaryotic mimic of the eukaryotic Grb2-associated binder (Gab) adaptor protein, which normally activates SHP-2. We have developed a transgenic Drosophila model to test this hypothesis by investigating whether CagA can function in a well-characterized Gab-dependent process: the specification of photoreceptors cells in the Drosophila eye. We demonstrate that CagA expression is sufficient to rescue photoreceptor development in the absence of the Drosophila Gab homologue, Daughter of Sevenless (DOS). Furthermore, CagA's ability to promote photoreceptor development requires the SHP-2 phosphatase Corkscrew (CSW). These results provide the first demonstration that CagA functions as a Gab protein within the tissue of an organism and provide insight into CagA's oncogenic potential. Since many translocated bacterial proteins target highly conserved eukaryotic cellular processes, such as the RTK signaling pathway, the transgenic Drosophila model should be of general use for testing the in vivo function of bacterial effector proteins and for identifying the host genes through which they function.