Background: Gastric cancer is the second most common cause of global cancer-related mortality. Although dedifferentiation predicts poor prognosis in gastric cancer, the molecular mechanism underlying dedifferentiation, which could provide fundamental insights into tumor development and progression, has yet to be elucidated. Furthermore, the molecular mechanism underlying the effects of hexamethylene bisacetamide (HMBA), a recently discovered differentiation inducer, requires investigation and there are no reported studies concerning the effect of HMBA on gastric cancer. Methods: Based on the results of FACS analysis, the levels of proteins involved in the cell cycle or apoptosis were determined using western blotting after single treatments and sequential combinations of HMBA and LiCl. GSK-3 beta and proton pump were investigated by western blotting after up-regulating Akt expression by Ad-Akt infection. To investigate the effects of HMBA on protein localization and the activities of GSK-3 beta, CDK2 and CDK4, kinase assays, immunoprecipitation and western blotting were performed. In addition, northern blotting and RNase protection assays were carried out to determine the functional concentration of HMBA. Results: HMBA increased p27(Kip1) expression and induced cell cycle arrest associated with gastric epithelial cell differentiation. In addition, treating gastric-derived cells with HMBA induced G0/G1 arrest and up-regulation of the proton pump, a marker of gastric cancer differentiation. Moreover, treatment with HMBA increased the expression and activity of GSK-3 beta in the nucleus but not the cytosol. HMBA decreased CDK2 activity and induced p27Kip1 expression, which could be rescued by inhibition of GSK-3 beta. Furthermore, HMBA increased p27Kip1 binding to CDK2, and this was abolished by GSK-3 beta inhibition. Conclusions: The results presented herein suggest that GSK-3 beta functions by regulating p27Kip1 assembly with CDK2, thereby playing a critical role in G0/G1 arrest associated with HMBA-induced gastric epithelial cell differentiation.