Disruption of E-cadherin (CDH1 gene) expression, subcellular localization or function arises during initiation and progression of almost 90% of all epithelial carcinomas. Nevertheless, the mechanisms through which this occurs are largely unknown. Previous studies showed the importance of CDH1 intron 2 sequences for proper gene and protein expression, supporting these as E-cadherin cis-modulators. Through RACE and RT-PCR, we searched for transcription events arising from CDH1 intron 2 and discovered several new transcripts. One, named CDH1a, with high expression in spleen and absent from normal stomach, was demonstrated to be translated into a novel isoform, differing from canonical E-cadherin in its N-terminal, as determined by mass spectrometry. Quantitative and functional assays showed that when overexpressed in an E-cadherin negative context, CDH1a replaced canonical protein interactions and functions. However, when co-expressed with canonical E-cadherin, CDH1a increased cell invasion and angiogenesis. Further, interferon-induced gene IFITM1 and IFI27 levels were increased upon CDH1a overexpression. Effects on invasion and IFITM1 and IFI27 expression were reverted upon CDH1a-specific knockdown. Importantly, CDH1a was de novo expressed in gastric cancer cell lines. This study presents a new mechanism by which E-cadherin functions are impaired by cis-regulatory mechanisms possibly with the involvement of inflammatory machinery. If confirmed in other cancer models, our data enclose potential for designing targeted therapies to rescue E-cadherin function.