Microsatellite instability-high (MSI-H) tumors are distinct molecular subtypes in gastric cancer. However, a few studies have comprehensively reported the molecular features of MSI-H tumors and their prognostic factors in locally advanced gastric cancer. This study aimed to clarify the molecular features and prognostic factors of locally advanced MSI-H gastric cancer. This study included 499 patients with locally advanced gastric cancer who underwent radical gastrectomy. We evaluated the MSI status and compared with previously published whole-exome sequencing, panel sequencing, and gene expression profiling data. Clinicopathological characteristics and molecular profiles were compared between patients with MSI-H and microsatellite stable (MSS) gastric cancer. A subgroup analysis of survival was performed in patients with MSI-H gastric cancer. MSI-H tumors were detected in 79 of 499 patients (15.8%). MSI-H tumors were associated with an increased tumor mutational burden, MLH1 downregulation, CD274 (PD-L1) upregulation, and enrichment of cell cycle pathways. Among patients with MSI-H gastric cancer, the disease-specific survival (DSS) tended to be better in the surgery plus tegafur, gimeracil, and oteracil potassium (S-1) adjuvant chemotherapy group than in the surgery alone group, especially for stage III patients. Furthermore, DSS was better in the T cell-inflamed gene expression signature-high group, and it tended to be worse in the non-solid type poorly differentiated adenocarcinoma group. The molecular features and prognostic factors of locally advanced MSI-H gastric cancer were clarified. S-1 adjuvant chemotherapy appears to be beneficial, and the T cell-inflamed gene expression signature and histopathological type are prognostic factors in MSI-H tumors.