Zinc-finger protein 331 (ZNF331), a Kruppel-associated box zinc-finger protein gene, was identified as a putative tumor suppressor in our previous study. However, the role of ZNF331 in tumorigenesis remains elusive. We aimed to clarify its epigenetic regulation and biological functions in gastric cancer. ZNF331 was silenced or downregulated in 71% (12/17) gastric cancer cell lines. A significant downregulation was also detected in paired gastric tumors compared with adjacent non-cancer tissues. In contrast, ZNF331 was readily expressed in various normal adult tissues. The downregulation of ZNF331 was closely linked to the promoter hypermethylation as evidenced by methylation-specific PCR, bisulfite genomic sequencing and reexpression by demethylation agent treatment. DNA sequencing showed no genetic mutation/deletion of ZNF331 in gastric cancer cell lines. Ectopic expression of ZNF331 in the silenced cancer cell lines MKN28 and HCT116 significantly reduced colony formation and cell viability, induced cell cycle arrests and repressed cell migration and invasive ability. Concordantly, knockdown of ZNF331 increased cell viability and colony formation ability of gastric cancer cell line MKN45. Two-dimensional gel electrophoresis and mass spectrometry-based comparative proteomic approach were applied to analyze the molecular basis of the biological functions of ZNF331. In all, 10 downstream targets of ZNF331 were identified to be associated with regulation of cell growth and metastasis. The tumor-suppressive effect of ZNF331 is mediated at least by downregulation of genes involved in cell growth promotion (DSTN, EIF5A, GARS, DDX5, STAM, UQCRFS1 and SET) and migration/invasion (DSTN and ACTR3), and upregulation of genome-stability gene (SSBP1) and cellular senescence gene (PNPT1). A novel target of ZNF331 (DSTN) was functionally validated. Overexpression of DSTN in BGC-823 cells increased colony formation and migration ability. In conclusion, our results suggest that ZNF331 possesses important functions for the suppression of gastric carcinogenesis as a novel functional tumor-suppressor gene.