E-cadherin (epithelial-cadherin), encoded by the CDH1 gene, is a transmembrane glycoprotein playing a crucial role in maintaining cell-cell adhesion. E-cadherin has been reported to be a tumor suppressor and to be down regulated in gastric cancer. Besides genetic mutations in CDH1 gene to induce hereditary diffuse gastric cancer (HDGC), epigenetic factors such as DNA hypermethylation also contribute to the reduction of E-cadherin in gastric carcinogenesis. In addition, expression of E-cadherin could be mediated by infectious agents such as H. pylori (Helicobacter pylori). As E-cadherin is vitally involved in signaling pathways modulating cell proliferation, survival, invasion, and migration, dysregulation of E-cadherin leads to dysfunction of gastric epithelial cells and contributes to gastric cancer development. Moreover, changes in its expression could reflect pathological conditions of gastric mucosa, making its role in gastric cancer complicated. In this review, we summarize the functions of E-cadherin and the signaling pathways it regulates. We aim to provide comprehensive perspectives in the molecular mechanism of E-cadherin and its involvement in gastric cancer initiation and progression. We also focus on its applications for early diagnosis, prognosis, and therapy in gastric cancer in order to open new avenues in this field.