Exonuclease 1 (Exo1) is an important nuclease involved in the mismatch repair system that contributes to the maintenance of genomic stability, modulation of DNA recombination and mediation of cell cycle arrest. Potential polymorphisms in Exo1 may alter cancer risks by influencing the repair activity of Exo1. We hypothesized that single-nucleotide polymorphisms (SNPs) in Exo1 might be associated with risks of gastric cancer. In this hospital-based study, the association of Exo1 A-1419G (rs3754093), C-908G (rs10802996), A238G (rs1776177), C498T (rs1635517), K589E (rs1047840), G670E (rs1776148), C723R (rs1635498), L757P (rs9350) and C3114T (rs851797) polymorphisms with gastric cancer risk in a central Taiwanese population was investigated. In total, 179 patients with gastric cancer and 179 age- and gender-matched healthy controls recruited from the China Medical Hospital in central Taiwan were genotyped. A significantly different distribution was found in the frequency of the Exol K589E genotype, but not the other genotypes, between the gastric cancer and control groups. The A allele Exol K589E conferred a significant (P = 0.0094) increased risk of gastric cancer. Gene-environment interactions with smoking were significant for Exo1 K589E polymorphism, which showed that the Exo1 K589E AG/AA genotype in association with smoking conferred an increased risk of 2.07-fold (95% confidence interval = 1.22-3.50) for gastric cancer. Our results provide the first evidence that the A allele of the Exo1 K589E may be associated with the development of gastric cancer and may be a novel and useful marker for primary prevention and anticancer intervention.