Transducer of ErbB-2.1 (Tob1), a tumor suppressor protein, is inactivated in a variety of cancers including stomach cancer. However, the role of Tob1 in gastric carcinogenesis remains elusive. The present study aimed to investigate whether Tob1 could inhibit gastric cancer progression in vitro, and to elucidate its underlying molecular mechanisms. We found differential expression of Tob1 in human gastric cancer (MKN28, AGS and MKN1) cells. The overexpression of Tob1 induced apoptosis in MKN28 and AGS cells, which was associated with sub-G1 arrest, activation of caspase-3, induction of Bax, inhibition of Bcl-2 and cleavage of poly (ADP-ribose) polymerase (PARP). In addition, Tob1 inhibited proliferation, migration and invasion, which were reversed in MKN1 and AGS cells transfected with Tob1 siRNA. Overexpression of Tob1 in MKN28 and AGS cells induced the expression of Smad4, leading to the increased expression and the promoter activity of p15, which was diminished by silencing of Tob1 using specific siRNA. Tob1 decreased the phosphorylation of Akt and glycogen synthase kinase-3β (GSK3β) in MKN28 and AGS cells, resulting in the reduced protein expression and the transcriptional activity of β‑catenin, which in turn decreased the expression of cyclin D1, cyclin-dependent kinase-4 (CDK4), urokinase plasminogen activator receptor (uPAR) and peroxisome proliferator and activator receptor-δ (PPARδ). Conversely, silencing of Tob1 induced the phosphorylation of Akt and GSK-3β, and increased the expression of β‑catenin and its target genes. Collectively, our study demonstrates that the overexpression of Tob1 inhibits gastric cancer progression by activating Smad4- and inhibiting β‑catenin-mediated signaling pathways.