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Objective: To investigate the clinical potential and safety of Moluodan to reverse gastric precancerous lesions. Methods: Patients aged 18–70 years diagnosed with moderate‐to‐severe atrophy and/or moderate‐to‐severe intestinal metaplasia, with or without low‐grade dysplasia, and negative for Helicobacter pylori were recruited in this randomized, double‐blind, parallel‐controlled trial. The primary outcome was the improvement of global histological diagnosis at 1‐year follow‐up endoscopy using the operative link for gastritis assessment, the operative link for gastric intestinal metaplasia assessment, and the disappearance rate of dysplasia. Results: Between November 3, 2017 and January 27, 2021, 166 subjects were randomly assigned to the Moluodan group, 168 to the folic acid group, 84 to the combination group, and 84 to the high‐dose Moluodan group. The improvement in global histological diagnosis was achieved in 60 (39.5%) subjects receiving Moluodan, 59 (37.8%) receiving folic acid, 26 (32.1%) receiving the combined drugs, and 36 (47.4%) receiving high‐dose Moluodan. Moluodan was non‐inferior to folic acid (95% confidence interval: −9.2 to 12.5; P = 0.02). High‐dose Moluodan had a trend for better protective efficacy, though there was no statistical significance. The disappearance rate of dysplasia was 82.8% in the Moluodan group, which was superior to folic acid (53.9%; P = 0.006). No drug‐related serious adverse events were observed. Conclusions: One pack of Moluodan three times daily for 1 year was safe and effective in reversing gastric precancerous lesions, especially dysplasia. Doubling its dose showed a better efficacy trend. [ABSTRACT FROM AUTHOR]