The generation of cancer hybrid cells by intra-tumoral cell fusion opens new avenues for tumor plasticity to develop cancer stem cells with altered properties, to escape from immune surveillance, to change metastatic behavior, and to broaden drug responsiveness/resistance. Genomic instability and chromosomal rearrangements in bi- or multinucleated aneuploid cancer hybrid cells contribute to these new functions. However, the significance of cell fusion in tumorigenesis is controversial with respect to the low frequency of cancer cell fusion events and a clonal advantage of surviving cancer hybrid cells following a post-hybrid selection process. This review highlights alternative processes of cancer hybrid cell development such as entosis, emperipolesis, cannibalism, therapy-induced polyploidization/endoreduplication, horizontal or lateral gene transfer, and focusses on the predominant mechanisms of cell fusion. Based upon new properties of cancer hybrid cells the arising clinical consequences of the subsequent tumor heterogeneity after cancer cell fusion represent a major therapeutic challenge.