Objective In this study, we aimed at looking for the long noncoding RNA (lncRNA) abnormally expressed in gastric cancer (GC) tissues and analyzing the association of its expression level with the clinicopathological feature and patient prognosis. The biological function of this lncRNA in occurrence and development of GC was studied in vivo and in vitro. The underlying molecular mechanism was further discussed. Methods We investigated the lncRNA expression level in GC tissues and normal gastric mucosa tissues by lncRNA chips analysis. The expression of lncRNA HOTAIR was detected by quantitative real time polymerase chain reaction (qRT-PCR). The relationship between HOTAIR expression level and prognosis was investigated by analyzing clinical samples. The influence of HOTAIR downregulation on GC cell proliferation, chemosensitivity, apoptosis, and invasion were determined by bromodeoxyuridine (BrdU) incorporation assay, flow cytometry analysis, and transwell assay. Tumor xenograft model was developed to study the influence of downregulated HOTAIR on tumor growth and metastasis. Results lncRNA HOTAIR had an extremely high expression level in GC cells, and predicted poor prognosis in patients. Downregulation of HOTAIR could promote chemosensitivity, induce apoptosis of GC cells, and significantly inhibit GC cell proliferation, invasion, and metastasis in vivo and in vitro. Conclusion It was proved that HOTAIR played a positive role in GC occurrence and development according to the study in its mechanism, function, and clinical manifestation so that it could be expected to become a new target in GC prevention and treatment.