Purpose: Emerging evidence has shown that long noncoding RNAs (lncRNAs) participate in oncogenesis and tumor progression. We previously found a novel lncRNA p4516 which was closely associated with prognosis by preliminary study of lncRNA expression profile from paired tumors and nontumor tissues in 198 gastric cancer (GC) patients. However, the exact biological functions and the underlying molecular mechanisms of p4516 in gastric tumorigenesis still remain unclear. Materials and methods: The RNA fluorescence in situ hybridization (RNA-FISH) analysis, cytoplasmic and nuclear RNA isolation and qRT-PCR were applied to determine the subcellular localization of p4516. Expression levels of p4516 were assessed using qRT-PCR in both GC cell lines and in 142 primary GC tissues. Correlations between p4516 expression and GC patients' clinicopathological parameters were analyzed. Gain- and loss-of-function experiments were employed to investigate the role of p4516 in proliferation, migration and invasion both in vitro and in vivo. In addition, Western blotting and immunohistochemical staining were used to examine the protein expression levels. Results: LncRNA p4516 was mainly localized in the nucleus of GC cells and p4516 tended to have higher expression levels in GC cells compared to the normal gastric mucosa-derived cells GES-1. Furthermore, higher expression levels of p4516 correlated with worse clinical outcomes in GC patients and acted as an independent prognostic biomarker. Functional analysis revealed that p4516 participated in the regulation of GC cell proliferation, invasion and migration both in vivo and in vitro. Moreover, p4516 was involved in epithelial-mesenchymal transition (EMT) in GC cells. Conclusion: Our study demonstrated the oncogenic role of novel lncRNA p4516 in the gastric carcinogenesis for the first time. High expression of p4516 may act as prognostic marker in patient with gastric cancer.