"It gives us a clue as to what is actually driving the cancer, and in doing so, it gives us a possible means of being able to manage it," he said.
More than 1300 New Zealanders die of bowel cancer every year.
The disease is becoming increasingly common in people under the age of 50, which could be due to changes in our diet, the researchers said.
Diet has a direct influence on our gut health, and the micro organisms living there.
To make their findings, the researchers undertook a world first study tracking the progress of 150 people, who had undergone a colonoscopy.
They genetically analysed the DNA from bowel samples taken during the colonoscopies to see if Bacteroides fragilis was present.
Between 12 and 15 years after their initial colonoscopy, 79 per cent of patients with the toxic Bacteroides fragilis in their gut had developed low grade dysplasia, which is a type of pre-cancer.
With further time and money, the discovery could be used to screen for people with the bug, and it could be used to develop a lifesaving vaccine, the research team said.
Frizelle said his team wanted to further study the bug in the hope it can identify people with the highest risk of developing bowel cancer.
"The earlier you can catch a disease, the better the prognosis," he said.
"As a surgeon you can treat one person at a time, if we can prevent the cancer from beginning or treating people as early as possible, that's the goal."