XAF1 (XIAP-associated factor 1) is a novel XIAP binding protein that can antagonize XIAP and sensitize cells to other cell death triggers. Our previous results have shown that aberrant hypermethylation of the CpG sites in XAF1 promoter is strongly associated with lower expression of XAF1 in gastric cancers. In our study, we investigated the effect of restoration of XAF1 expression on growth of gastric cancers. We found that the restoration of XAF1 expression suppressed anchorage-dependent and -independent growth and increased sensitivity to TRAIL and drug-induced apoptosis. Stable cell clones expressing XAF1 exhibited delayed tumor initiation in nude mice. Restoration of XAF1 expression mediated by adenovirus vector greatly increased apoptosis in gastric cancer cell lines in a time- and dose-dependent manner and sensitized cancer cells to TRAIL and drugs-induced apoptosis. Adeno-XAF1 transduction induced cell cycle G2/M arrest and upregulated the expression of p21 and downregulated the expression of cyclin B1 and cdc2. Notably, adeno-XAF1 treatment significantly inhibited tumor growth, strongly enhanced the antitumor activity of TRAIL in a gastric cancer xenograft model in vivo, and significantly prolonged the survival time of animals bearing tumor xenografts. Complete eradication of established tumors was achieved on combined treatment with adeno-XAF1 and TRAIL. Our results document that the restoration of XAF1 inhibits gastric tumorigenesis and tumor growth and that XAF1 is a promising candidate for cancer gene therapy.