We report that the odd-skipped related 1 (OSR1) gene encoding a zinc-finger transcription factor was preferentially methylated in gastric cancer by genome-wide methylation screening. OSR1 expression was frequently silenced or down-regulated in gastric cancer cell lines. OSR1 expression was also significantly down-regulated at both mRNA and protein levels in primary gastric cancer tissues compared with adjacent normal tissues. The silencing or down-regulation of OSR1 was closely associated with promoter hypermethylation. Overexpression of OSR1 significantly inhibited cell growth, arrested the cell cycle, and induced apoptosis in the gastric cancer cell lines AGS, MKN28, and MGC803. Conversely, knockdown of OSR1 by OSR1-short hairpin RNA significantly enhanced cell growth, promoted the cell cycle, and inhibited apoptosis in the normal gastric epithelial cell line GES1. The dual-luciferase reporter assay revealed that OSR1 activated p53 transcription and repressed the T-cell factor (TCF)/lymphoid enhancer factor (LEF). Complementary DNA expression array and western blotting showed that OSR1 increased the expression of nuclear p53, p21, Fas, and death receptor-5, and suppressed the expression of cyclin D1 and cyclin-dependent kinase 4 in the p53 signalling pathway. In addition, OSR1 suppressed the expression of cytoplasmic β-catenin, TCF-1, and LEF1 in the Wnt/β-catenin signalling pathway. OSR1 methylation was detected in 51.8% of primary gastric cancer patients (85 of 164) by bisulphite genomic sequencing. Multivariate Cox regression analysis showed that OSR1 methylation was an independent predictor of poor survival. Kaplan-Meier survival curves revealed that OSR1 methylation was associated with shortened survival in TNM stage I-III patients. In conclusion, OSR1 acts as a functional tumour suppressor through the transcriptional activation of p53 and repression of TCF/LEF in gastric cancer. Detection of OSR1 methylation may serve as a potential biomarker of the early stage of gastric cancer.