Gastric cancer (GC) is among the most common malignant tumors. Numerous studies have reported that microRNAs (miRNAs) play significant roles in carcinogenesis and treatment. An miRNA, miR-520-3p, has been identified as a cancer-suppressing gene in several cancers. However, the role and underlying mechanism of miR-520-3p regulation of GC remain unknown. In this study, the expression levels of miR-520-3p in cancer tissues of patients with GC — and in adjacent normal tissues, gastric cancer cell lines, and human normal gastric epithelial cells — were detected by qRT-PCR. RNA interference was performed in GC cell lines. After the corresponding treatment, the cells were characterized in vitro or in vivo to evaluate their molecular function. CCK-8, cell colony formation, and a Transwell assay were used to detect cell proliferation rate, viability, and invasion ability. A dual-luciferase reporter gene experiment was used to explore the potential molecular mechanisms of miR-520-3p. The results showed that the expression of miR-520-3p was significantly downregulated in GC tissues and cells, and upregulation of miR-520-3p could inhibit the proliferation, vitality, and invasion of GC cells both in vivo and in vitro. The expression of Kruppel-like factor 7 (KLF7) was greatly upregulated in GC tissues. MiR-520-3p can adsorb KLF7 in GC cells, and KLF7 can reverse the inhibitory effect of miR-520-3p overexpression on the proliferation of GC cells. This study revealed that miR-520-3p plays a significant role in inhibiting the proliferation, invasion, and migration of GC cells by targeting KLF7. These data demonstrate that miR-520-3p may serve as a novel prognostic biomarker and a potential therapeutic target for GC.