Cancer is among the major causes of morbidity and mortality worldwide, and current treatment methods are limited by various drawbacks such as drug resistance, non-specificity, and differences among patients. With recent developments in this field, the human microbiota has emerged as one of the most important determinants for the onset, progression, and treatment of cancer. The bidirectional interactions of host microbiota and malignancies were investigated comprehensively in this review. Firstly, the origins, composition, and functional dynamics of the intra-tumoral microbiome were discussed, and then examined how microbial dysbiosis drives cancer development through DNA damage, chronic inflammation, epithelial–mesenchymal transition, and pharmacological inactivation. Moreover, some of the microbiome-based therapies, including phage-based therapy, bacterial extracellular vesicles, engineered probiotics, CRISPR/microbiome interactions, and microbiome regulation of immune checkpoint inhibitors and CAR T-cell therapy, were considered. In addition, the relevance of metabolites produced by the microbiome and taxonomy-based signatures as non-invasive biomarkers for detecting cancer at its early stages and predicting treatment outcomes is highlighted. The use of pharmacomicrobiomics and multi-omics profiling, along with artificial intelligence/machine learning, will accelerate the process of translating microbiome research into clinical applications and personalized cancer therapy. This review presents practical approaches that will help in leveraging the interaction between the microbiome and host in order to optimize the efficacy of immunotherapy while minimizing the risk of toxicity. Finally, we highlight a refined understanding of the microbiota-cancer axis, which has strong potential to redefine clinical paradigms in oncology and pave the way for more precise, effective, and individualized cancer management.