Ursodeoxycholic acid (UDCA) is known as a suppressor of cholestatic liver diseases and colorectal cancer development. Here, we demonstrate that UDCA induces apoptosis without necrotic features in SNU601, SNU638, SNU1 and SNU216 human gastric cancer cells, implying its possible use as an effective chemotherapeutic agent in treatment of gastric cancer. UDCA-induced apoptosis was dominantly mediated by an extrinsic pathway dependent on caspase-8, -6 and -3. UDCA increased expression of death receptor 5 [(DR5), also known as tumor necrosis factor-related apoptosis-inducing ligand (TRAIL) receptor 2], and this DR appeared to be responsible for UDCA-induced apoptosis, as evidenced by DR5 knockdown. UDCA triggered formation of lipid rafts that played crucial roles in UDCA-induced apoptotic actions. Lipid rafts were required not only for provision of a proper site for DR5 action but also for mediation of DR5 expression. In addition, reactive oxygen species (ROS) and protein kinase C (PKC) δ appeared to be implicated in UDCA-induced raft-dependent DR5 expression. Our results indicate that UDCA-induced apoptosis is mediated by DR5 expression, which is regulated by the raft formation/ROS production/PKCδ activation pathway and DR5 localization into lipid rafts in gastric cancer cells. Tumor-suppressive activity of UDCA was confirmed in an in vivo system: UDCA (120 mg/kg/day) significantly decreased tumor growth in gastric cancer xenograft mice. Taken together, our results demonstrate that UDCA can be used as a potent chemotherapeutic agent for treatment of gastric cancer.