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Background Although the prognosis of gastric cancer patients have a favorable progression, there are some patients with unusual patterns of locoregional and systemic recurrence. Therefore, a better understanding of early molecular events of the disease is needed. Current evidences demonstrate that long noncoding RNAs (lncRNAs) may be an important class of functional regulators involved in human gastric cancers development. Our previous studies suggest that HOTAIR contributes to gastric cancer development, and the overexpression of HOTAIR predicts a poor prognosis. In this study, we investigated the characteristic of the LncRNA FEZF1-AS1 in gastric cancer. Methods QRT-PCR was used to detect the expression of FEZF1-AS1 in gastric cancer tissues and cells. MTT assays, clonogenic survival assays and nude mouse xenograft model were used to examine the tumorigenesis function of FEZF1-AS1 in vitro and in vivo. Bioinformatics analysis were used to select downstream target genes of FEZF1-AS1. Cell cycle analysis, ChIP, RIP,RNA Pulldown assays were examined to dissect molecular mechanisms. Results In this study, we reported that FEZF1-AS1, a 2564 bp RNA, was overexpressed in gastric cancer, and upregulated FEZF1-AS1 expression indicated larger tumor size and higher clinical stage; additional higher expression of FEZF1-AS1 predicted poor prognosis. Further experiments revealed that knockdown FEZF1-AS1 significantly inhibited gastric cancer cells proliferation by inducing G1 arrest and apoptosis, whereas endogenous expression FEZF1-AS1 promoted cell growth. Additionally, RIP assay and RNA-pulldown assay evidenced that FEZF1-AS1 could epigenetically repress the expression of P21 via binding with LSD1, the first discovered demethylase. ChIP assays demonstrated that LSD1 could directly bind to the promoter of P21, inducing H3K4me2 demethylation. Conclusion In summary, these data demonstrated that FEZF1-AS1 could act as an “oncogene” for gastric cancer partly through suppressing P21 expression; FEZF1-AS1 may be served as a candidate prognostic biomarker and target for new therapies of gastric cancer patients. Electronic supplementary material The online version of this article (doi:10.1186/s12943-017-0588-9) contains supplementary material, which is available to authorized users.