Long non-coding RNAs (lncRNAs) have been implicated in the pathogenesis of gastric cancer; however, their mechanisms of action remain largely unknown. The aim of this study was to identify lncRNAs involved in the tumorigenesis of gastric cancer and to investigate the signaling pathways they affect. Using microarray and RT-qPCR analyses, candidate lncRNAs were screened in paired gastric cancer tissues. The analysis revealed MIR4435-2HG to be markedly up-regulated in gastric cancer samples compared to normal stomach specimens. Increased MIR4435-2HG expression was associated with aggressive clinicopathologic features and unfavorable tumor stage. Functional experiments showed that MIR4435-2HG up-regulation enhanced gastric cancer cell proliferation, clonogenicity, and migration and invasion in vitro, as well as tumorigenicity in mice. Using RNA pull-down and mass-spectrometry analyses we found and verified a direct and novel interaction between MIR4435-2HG and desmoplakin (DSP), the most abundant desmosomal protein. Overexpression and knockdown experiments revealed opposing roles for DSP and MIR4435-2HG, unmasking a cascade through which MIR4435-2HG binds to and inhibits DSP, leading to activation of WNT/β-catenin signaling and epithelial-mesenchymal transition in gastric cancer cells. We propose that the MIR4435-2HG/DSP/WNT axis serves as a critical effector of carcinogenesis and progression of gastric cancer, and could be exploited therapeutically to improve patients’ outcomes.