N-myc downstream-regulated gene 1 (NDRG1) has been proposed as a tumor suppressor gene in many different types of tumors, but its potential function and corresponding mechanism are not yet fully elucidated. This study aims to detect the possible function of NDRG1 in gastric cancer progression. In this study, 112 paired gastric cancer tissues and corresponding nonmalignant gastric tissues were utilized to identify the differential protein expression of NDRG1 by immunohistochemistry and its clinical significance was analyzed. Furthermore, 49 of 112 paired gastric specimens were used to detect the differential mRNA expression by real-time PCR. The over expression of NDRG1 in human gastric cancer cell line AGS by PcDNA3.1–NDRG1 transfection was utilized to detect the role of NDRG1 in regulating the biological behavior of gastric cancer. NDRG1 expression was significantly decreased in primary gastric cancer tissues, compared with its corresponding nonmalignant gastric tissues (p < 0.05), and its decreased expression was significantly associated with lymph node metastasis (p < 0.01), invasion depth (p < 0.01) and differentiation (p < 0.05). Additionally, the overall survival rate of gastric cancer patients with high expression of NDRG1 was higher than those with low expression during the follow-up period. NDRG1 overexpression suppressed cells proliferation, invasion and induced a G1 cell cycle arrest in gastric cancer. Furthermore, the down-regulation of NDRG1 in gastric cancer metastatic progression was correlated to E-cadherin and MMP-9. Our results verify that NDRG1 acts as a tumor suppressor gene and may play an important role in the metastasis progression and prognosis of gastric cancer.