Background Prospero homeobox 1 (PROX1) functions as a tumor suppressor gene or an oncogene in various cancer types. However, the distinct function of PROX1 in gastric cancer is unclear. We determined whether PROX1 affected the oncogenic behavior of gastric cancer cells and investigated its prognostic value in patients with gastric cancer. Methods A small interfering RNA against PROX1 was used to silence PROX1 expression in gastric cancer cell lines AGS and SNU638. Expression of PROX1 in gastric cancer tissues was investigated by performing immunohistochemistry. Apoptosis, proliferation, angiogenesis, and lymphangiogenesis were determined by performing the TUNEL assay and immunohistochemical staining for Ki-67, CD34, and D2-40. Results PROX1 knockdown induced apoptosis by activating cleaved caspase-3, caspase-7, caspase-9, and poly(ADP-ribose) polymerase, and by decreasing the expression of anti-apoptotic proteins Bcl-2 and Bcl-xL. PROX1 knockdown also suppressed tumor cell proliferation. In addition, PROX1 knockdown decreased lymphatic endothelial cell invasion and tube formation and the expression of vascular endothelial growth factor (VEGF)-C and -D and cyclooxygenase (COX)-2. However, PROX1 knockdown only decreased umbilical vein endothelial cell invasion, not tube formation. The mean Ki-67 labeling index and lymphatic vessel density value of PROX1-positive tumors were significantly higher than those of PROX1-negative tumors. However, no significant difference was observed between PROX1 expression and apoptotic index or microvessel density. PROX1 expression was significantly associated with age, cell differentiation, lymph node metastasis, cancer stage, and poor survival. Conclusions These results indicate that PROX1 mediates the progression of gastric cancer by inducing tumor cell proliferation and lymphangiogenesis.