Here, we found that BTG1 overexpression inhibited proliferation, migration and invasion, induced G2/M arrest, differentiation, senescence and apoptosis in BGC-823 and MKN28 cells (p < 0.05). BTG1 transfectants showed a higher mRNA expression of Cyclin D1 and Bax, but a lower mRNA expression of cdc2, p21, mTOR and MMP-9 than the control and mock (p < 0.05). After treated with cisplatin, MG132, paclitaxel and SAHA, both BTG1 transfectants showed lower mRNA viability and higher apoptosis than the control in both time- and dose-dependent manners (p < 0.05) with the hypoexpression of chemoresistance-related genes (slug, CD147, GRP78, GRP94, FBXW7 TOP1, TOP2 and GST-π). BTG1 expression was restored after 5-aza-2'-deoxycytidine treatment in gastric cancer cells. BTG1 expression was statistically lower in gastric cancer than non-neoplastic mucosa and metastatic cancer in lymph node (p < 0.05). BTG1 expression was positively correlated with depth of invasion, lymphatic and venous invasion, lymph node metastasis, TNM staging and worse prognosis (p < 0.05). The diffuse-type carcinoma showed less BTG1 expression than intestinal- and mixed-type ones (p < 0.05). BTG1 overexpression suppressed tumor growth and lung metastasis of gastric cancer cells by inhibiting proliferation, enhancing autophagy and apoptosis in xenograft models. It was suggested that down-regulated BTG1 expression might promote gastric carcinogenesis partially due to its promoter methylation. BTG1 overexpression might reverse the aggressive phenotypes and be employed as a potential target for gene therapy of gastric cancer.