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Gastric cancer is ranked as the third leading cause of cancer-related death in the world. Although extensive efforts have been made in recent decades to treat gastric cancer with various anticancer drugs, effective anti-gastric cancer therapeutics to cure the disease are still lacking in the clinics. Therefore, potent novel anti-gastric cancer drugs are greatly needed. In this study, we explored a novel anti-gastric cancer agent from a medicinal herb named Juncus effusus and found that the active component dehydroeffusol (DHE), a small molecular phenanthrene, effectively inhibited gastric cancer cell proliferation and tumorigenesis by inducing tumor suppressive endoplasmic reticulum (ER) stress and by triggering moderate apoptosis. Mechanistic studies revealed that DHE selectively activated the intracellular tumor suppressive stress response by promoting the overexpression of the key ER stress marker DNA damage-inducible transcript 3 (DDIT3), through upregulation of activating transcription factor 4 (ATF4). Concurrently, DHE suppressed the expression of the cell survival and ER stress marker glucose regulated protein of molecular mass 78 (GRP78) via downregulation of the transcription factor ATF6. In addition, DHE markedly activated the stress response signaling pathway MEKK4-MKK3/6-p38-DDIT3, but significantly inhibited ERK signaling. Our data suggest that DHE inhibits gastric cancer cell growth and tumorigenicity through selectively inducing a robust tumor suppressive ER stress response and a moderate apoptosis response. Therefore, DHE may provide a novel drug candidate for further development of potential anti-gastric cancer therapeutics.