Alpha-fetoprotein (AFP) producing gastric cancer (AFP-GC) is very malignant and highly metastatic compared with common gastric cancer. However, the causal relationship between AFP production and the high malignancy of AFP-GC is unclear. We investigated AFP gene regulation in AFP-GC by an active transcription factor, HNF1 (hepatocyte nuclear factor 1) and a repressive transcription factor, ATBF1 (AT motif binding factor 1). RNase protection assays revealed that the production of AFP in gastric cancer cells did not directly associate with HNF1 expression. An inverse relation between the expressions of ATBF1 and AFP was clearly observed in gastric cancer cells. CAT assays showed the direct inhibition of AFP gene expression by ATBF1. Methylation analysis of the AFP promoter region in gastric cancer cells suggested that methylation itself could not explain the silencing of the AFP gene. Immunohistochemistry of resected clinical samples revealed that AFP producing cells lacked ATBF1 immunoreactivity. Our data suggests that the absence of ATBF1 is responsible for AFP gene expression in gastric cancer, and the absence of ATBF1 is a distinct characteristic of AFP-GC and might be important for its highly malignant nature.