Bone morphogenetic proteins and activin membrane-bound inhibitor (BAMBI) and drosophila mothers against decapentaplegic protein 7 (Smad7) are known to negatively regulate the transforming growth factor-β (TGF-β) signaling and play an important role in the progression of many malignant tumors. However, it remains unclear whether expression of BAMBI alone or in combination with Smad7 is associated with the progression of gastric cancer. In the present study, we investigated the expression of BAMBI and Smad7 in 276 cancer tissues and 263 tumor-adjacent tissues from gastric cancer patients, using tissue-microarray-based immunohistochemistry. The expression of BAMBI and Smad7 was significantly higher in cancer tissues than in tumor-adjacent tissues. The expression of BAMBI was significantly correlated with increased depth of invasion (P = 0.010), lymphatic invasion (P < 0.001), lymph node metastasis (P = 0.001), TNM stage (P = 0.008), and decreased differentiation (P = 0.046). The expression of BAMBI was associated with a significantly shorter overall survival (OS) (P = 0.006) and disease-free survival (DFS) (P = 0.011). The combined expression of BAMBI and Smad7 was associated with more invasion and metastasis as well as less survival time in gastric cancer patients. The univariate analysis showed that the expression of BAMBI alone or in combination with Smad7 was significantly associated with the OS and DFS. These findings suggest that BAMBI and Smad7 may cooperatively inhibit the TGF-β signaling, and thus promote the progression of gastric cancer.