CircRNAs have critical effects on tumor development and progression. However, circPGD effect on gastric cancer (GC) is still elusive. Nuclear and cytoplasmic RNA fractionation, and RNA-FISH assay examined the localization of circPGD in MGC-803 cells. qRT-PCR was conducted to detect the expression and prognostic significance of circPGD, miR-16-5p, and ABL2 within GC tissues. Meanwhile, qRT-PCR, luciferase reporter assays, rescue, and western blotting assays confirmed the interactions between circPGD, miR-16-5p, and ABL2. Transwell, wound healing, and colony-formation assays, as well as CCK-8 and cell apoptosis assays, analyzed the functions of circPGD, miR-16-5p, ABL2, as well as PGD-219aa within GC cells. Western blotting and cell immunofluorescence experiments detected the differences in the expression of the related proteins. Finally, xenograft and metastatic mouse models were used to investigate circPGD function in vivo. Mass spectrometry was used to detect the existence of PGD-219aa in MGC-803 cells. CircPGD was localized in the cytoplasm and nucleus of MGC-803 cells. Compared with the control, circPGD and ABL2 expression increased within GC tissues and cells, and the miR-16-5p level was decreased. Functionally, circPGD promoted cell proliferation, migration and suppressed apoptosis in vitro. Mechanistically, circPGD sponged miR-16-5p for relieving miR-16-5p suppression on the corresponding target ABL2 via the SMAD2/3 and YAP signaling pathways. In addition, circPGD encodes a novel PGD-219aa protein that can enhance the growth and migration of GC cells, while inhibiting GC cells apoptosis via the SMAD2/3 and YAP signaling pathways. Furthermore, circPGD overexpression enhanced tumor aggressiveness, while circPGD knockdown inhibited tumor growth. Overall, circPGD has a novel oncogenic effect on GC cells, indicating the potential of circPGD as the tumorigenic factor and a promising diagnostic marker for GC.