Tumor budding, considered as an independent risk factor reflecting prognosis of some malignant tumors, has been recognized as an important clinicopathological indicator of colorectal carcinoma. However, the evaluation of tumor budding and its clinicopathological significance in gastric cancer remain controversial. To investigate the relationship between tumor budding and clinical biological behavior of early gastric cancer (EGC) and assess the predictive value of tumor budding for lymph node metastasis as well as its impact on prognosis of EGC patients. Tissue specimens of 164 EGC patients who underwent radical gastrectomy between June 2011 and January 2017 from a single center were selected to carry out HE and CK staining respectively, so as to evaluate tumor budding under light microscopy. Clinicopathological data and follow-up results of all EGC patients were collected for statistical analysis among tumor budding, EGC clinicopathological factors and prognosis. Of all 164 EGC patients, there were 84 (51.2%) cases with mucosal invasion and 80 (48.8%) cases with submucosal invasion. Meanwhile, 32 cases (19.5%) had lymph node metastasis, 19 (11.6%) had lympho-vascular invasion and 4 (2.4%) had early recurrence. Tumor budding were observed in 90 (54.9%) patients, with low-grade budding 68 (41.5%) cases and high-grade budding 22 (13.4%) cases. Tumor budding was closely correlated with tumor size (c2 = 6.609, P = 0.037), tumor histologic differentiation (c2 = 10.522, P = 0.032), depth of invasion (c2 = 8.787, P = 0.012), lymph node metastasis (c2 = 24.226, P < 0.01), TNM stage (c2 = 24.226, P < 0.01), lympho-vascular invasion (c2 = 8.225, P = 0.016) and early recurrence (c2 = 6.462, P = 0.040). Additionally, tumor budding was correlated with postoperative survival rate as well. Multiple regression analysis revealed that tumor budding was an independent influencing factor of postoperative 3-year survival rate, 5-year survival rate, OS, DFS and DSS (P < 0.05). Furthermore, tumor budding was an independent risk factor of lymph node metastasis of EGC patients, and high-grade budding was a high-risk indicator of lymph node metastasis. Tumor budding is related to tumor size, tumor histologic differentiation, depth of invasion, lymph node metastasis, lympho-vascular invasion and early recurrence of EGC. Tumor budding, especially high-grade budding can serve as an indicator for predicting lymph node metastasis of EGC, and high-grade budding could be an important parameter for evaluating prognosis of EGC patients.