Differential abundance (DA) analysis of microbiome data continues to be a challenging problem due to the complexity of the data. In this article we define the notion of “sampling fraction” and demonstrate a major hurdle in performing DA analysis of microbiome data is the bias introduced by differences in the sampling fractions across samples. We introduce a methodology called Analysis of Compositions of Microbiomes with Bias Correction (ANCOM-BC), which estimates the unknown sampling fractions and corrects the bias induced by their differences among samples. The absolute abundance data are modeled using a linear regression framework. This formulation makes a fundamental advancement in the field because, unlike the existing methods, it (a) provides statistically valid test with appropriate p-values, (b) provides confidence intervals for differential abundance of each taxon, (c) controls the False Discovery Rate (FDR), (d) maintains adequate power, and (e) is computationally simple to implement.