Fusion genes act as potent oncogenes, resulting from chromosomal rearrangements or abnormal transcription in many human cancers. Although multiple gastric cancer genomes have been sequenced, the driving recurrent gene fusions have not been well characterized. Here, we used paired-end transcriptome sequencing to identify novel gene fusions in 18 human gastric cancer cell lines and 18 pairs of primary human gastric cancer tissues and their adjacent normal tissues. Multiple samples revealed expression of PPP1R1B-STARD3 fusion transcript. The presence of PPP1R1B-STARD3 correlated with elevated levels of PPP1R1B mRNA. PPP1R1B-STARD3 fusion transcript was detected in 21.3% of primary human gastric cancers but not in adjacent matched normal gastric tissues. Based on reverse transcription PCR analysis of DNA, unlike other fusions described in gastric cancer, the PPP1R1B-STARD3 appears to be generated by RNA processing without chromosomal rearrangement. Overexpression of PPP1R1B-STARD3 in MKN-28 significantly increased cell proliferation and colony formation. This increased proliferation was mediated by activation of phosphatidylinositol-3-kinase (PI3K)/AKT signaling. Furthermore, expression of PPP1R1B-STARD3 fusion transcript enhanced the tumor growth of MKN-28 cells in athymic nude mice. These findings show that PPP1R1B-STARD3 fusion transcript has a key role in subsets of gastric cancers through the activation of PI3K/AKT signaling.