Potassium channels regulate diverse biological processes, ranging from cell proliferation to immune responses. However, the functions of potassium homeostasis and its regulatory mechanisms in adult stem cells and tumors remain poorly characterized. Here, we identify Sandman, a two-pore-domain potassium channel in Drosophila, as an essential regulator for the proliferation of intestinal stem cells and malignant tumors, while dispensable for the normal development processes. Mechanistically, loss of sandman elevates intracellular K+ concentration, leading to growth inhibition. This phenotype is rescued by pharmacological reduction of intracellular K+ levels using the K+ ionophore. Conversely, overexpression of sandman triggers stem cell death in most regions of the midgut, inhibits tumor growth, and induces a Notch loss-of-function phenotype in the posterior midgut. These effects are mediated predominantly via the induction of endoplasmic reticulum (ER) stress, as demonstrated by the complete rescue of phenotypes through the co-expression of Ire1 or Xbp1s. Additionally, human homologs of Sandman demonstrated similar ER stress-inducing capabilities, suggesting an evolutionarily conserved relationship between this channel and ER stress. Together, our findings identify Sandman as a shared regulatory node that governs Drosophila adult stem cell dynamics and tumorigenesis through bioelectric homeostasis, and reveal a link between the two-pore potassium channel and ER stress signaling.