Sphingosine-1-phosphate (S1P) plays an important role in regulating many biological processes. Sphingosine-1-phosphate phosphatase 1 (SGPP1) can dephosphorylate S1P into sphingosine and tip the balance of sphingosine-S1P. Increased levels of sphingosine leads to a decrease in the ability of cell invasion as well as an increase in the ability of cell apoptosis. However, little is known regarding the effects of SGPP1 in gastric cancer. The present study examined the function of SGPP1 on gastric cancer cell lines as well as its clinical relevance in gastric cancer progression. Using immunohistochemistry and RT-qPCR techniques, the clinical significance of SGPP1 expression was analyzed in 288 paraffin-embedded gastric tissue specimens and 219 fresh gastric tissues, respectively. Transgenes encoding ribozymes to specifically target human SGPP1 (pEF-SGPP1) was constructed. Human gastric cancer cell lines (AGS and HGC27) were transfected with pEF-SGPP1 transgene and examined by functional analysis. SGPP1 was downregulated in gastric cancer tissues, compared with adjacent normal gastric tissues (p=0.034). SGPP1 mRNA levels in gastric cancer tissues were significantly decreased when compared with their adjacent non-cancerous tissues (p<0.001). Weakly expressed SGPP1 was positively correlated with the lymph node metastasis (p=0.005) and distant metastasis (p=0.031). Kaplan-Meier survival curves revealed that patients with SGPP1 positive expression had a significant increase in overall survival (OS) (p=0.034) and progression-free survival (PFS) (p=0.041). Multivariate analysis indicated the expression of SGPP1 was an independent prognostic factor in gastric cancer patients (p=0.041). In vitro experiments showed that knockdown of SGPP1 resulted in an increase in the invasion (2-fold) and migration (5-fold) of AGS and HGC27. The two gastric cancer cells transfected with pEF-SGPP1 exhibited a slower rate of growth with less adhesion. Thus, our findings provided evidence that SGPP1 may serve as a prognostic biomarker for patients with advanced gastric cancers.