The C subunit of the vacuolar H(+)-ATPase or V-ATPase regulates the activity and assembly of the proton pump at cellular membranes. It has been shown to be strongly upregulated in oral squamous cell carcinoma, a highly metastatic epithelial cancer. In addition, increased V-ATPase activity appears to correlate with invasiveness of cancer cells, but the underlying mechanism is largely unknown. Using the Drosophila wing imaginal epithelium as an in vivo model system, we demonstrate that overexpression of Vha44, the Drosophila orthologue of the C subunit, causes a tumor-like tissue transformation in cells of the wing epithelium. Overexpressing cells are excluded from the epithelium and acquire invasive properties while displaying high apoptotic rates. Blocking apoptosis in these cells unmasks a strong proliferation stimulus, leading to overgrowth. Furthermore, we show that excess Vha44 greatly increases acidification of endocytic compartments and interferes with endosomal trafficking. As a result, cargoes such as GFP-Lamp1 and Notch accumulate in highly acidified enlarged endolysosomal compartments. Consistent with previous reports on the endocytic activation of Eiger/JNK signaling, we find that V-ATPase stimulation by Vha44 causes JNK signaling activation whereas downmodulation of JNK signaling rescues the invasive phenotypes. In summary, our in vivo-findings demonstrate that increased levels of V-ATPase C subunit induce a Eiger/JNK-dependent cell transformation within an epithelial organ that recapitulates early carcinoma stages.