Our tissues usually have just the right number of cells to optimally fulfil their function. Not enough cells within a tissue can lead to dysfunction, while too many cells result in a tumour. Yet, how this homeostatic balance is maintained remains poorly defined. Most differentiated cells within tissues have a finite lifespan and need to be replaced at a corresponding pace to maintain tissue homeostasis. These new differentiated cells are generated by proliferation of the stem/progenitor cells that serve the tissue. Work in simple invertebrates clearly suggests stem cells respond to at least two types of signals: niche signaling and growth factors. Niche signals promote the undifferentiated state by preventing differentiation, and thus allow for stem cell self-renewal. Growth factor sources comprise a systemic input reflecting the animal’s nutritional status, and a localized, homeostatic feedback from the tissue that the stem cells serve. That homeostatic signal couples stem cell proliferation rates to the tissue’s need for new differentiated cells. Evidence from simple organisms suggests two types of benign tumours can arise from deregulation of either niche or homeostatic signaling. Namely, constitutive niche signaling promotes the formation of undifferentiated “stem cell” tumours, while defective homeostatic signaling leads to the formation of differentiated tumours. We propose that these principles may be conserved and underlie benign tumour formation in humans, while benign tumours can evolve into cancer.