Circular RNAs (circRNAs) have emerged as essential regulators and biomarkers of various cancers. However, the effects of a novel circRNA termed circGRAMD1B in human gastric cancer (GC) remain unclear. A microarray was used to screen circRNA expression in GC. Quantitative real-time PCR was used to detect the expression of circGRAMD1B. Gain- and loss- of-function experiments were performed to investigate the biological functions of circGRAMD1B in vitro and vivo. Bioinformatics analysis, fluorescence in situ hybridization, dual-luciferase reporter assay, RNA immunoprecipitation, RNA pull-down assay, and rescue experiments were conducted to confirm the underlying mechanisms of competitive endogenous RNAs (ceRNAs). We screened differentially expressed circRNAs and found that circGRAMD1B expression was downregulated in GC tissues and cell lines. Functionally, circGRAMD1B acted as an anti-oncogene and inhibited the proliferation, migration, and invasion abilities of GC cells. Then, we verified that circGRAMD1B served as a sponge that targeted miR-130a-3p in GC cells; circGRAMD1B alleviated GC cell proliferation, migration, and invasion by targeting miR-130a-3p. A mechanistic analysis showed that PTEN and p21 were involved in circGRAMD1B/miR-130a-3p axis-inhibited GC tumorigenesis. Our findings suggest that circGRAMD1B plays an important role in GC progression by regulating miR-130a-3p-PTEN/p21, which may provide a potential biomarker and therapeutic target for GC.